MARKET TREND FOR TODAY
July 30, 2012
After a scary session in the last hour and half on the
expiry day, i.e. Thursday, the Markets opened on Friday with great strength on back
of positive global cues and though it came off from its intraday highs, it
still managed to end the day with decent gains. The Markets opened on a gap up
opening and in the afternoon trade, went on to give the day’s high of 5149.95.
In the second half of the session, it did came off from its highs, but still
managed to end the day at 5099.85, posting a decent gain of 56.85 points or
1.13%. It has formed a higher top and sharply higher bottom on the Daily High
Low Charts. On a Weekly note, the NIFTY
has ended the day with net loss of 105.25 points or 2.01%.
Markets are again expected to open above the 200-DMA levels,
the levels near which it has closed on Friday after dipping below it on
Thursday. The Markets are likely to remain volatile due to two external events
coming up – RBI Policy tomorrow and the FED (less important) meet the day
after. RBI Policy announcement, especially, has kept the Markets selectively
performing but the bullish undertone cannot be ruled out given that the global
Markets have rallied almost 6% in last three sessions.
Today, the levels of 5150-5153 shall continue to act as
resistance as its previous high and also the 100-DMA. The Markets shall open
higher but intraday trajectory and maintaining opening gains would be again
important. The levels of 5103, its 200-DMA is expected to act as immediate
support, followed by 5065.
The RSI—Relative Strength Index on the Daily Chart is
43.1163 and it shows no negative divergence or failure swings. The Daily MACD
continues to trade below its signal line. On the Weekly Charts, the RSI is
47.8470 and it is neutral as it shows no negative divergence or failure swings.
The Weekly MACD is bullish as it trades below its signal line.
The NIFTY and Stock Futures have continued to add Open
Interest implying no significant short covering on Friday.
Amid this chaos, it is important to note that the Markets
have underperformed due to, firstly, the expiry activity on Thursday, and also
continuing caution ahead of RBI Policy announcement coming up tomorrow. Though
50% of the surveyed people do not expect any rate cut.
We wish to further point out that keeping our head in place
is extremely important, especially when such chaotic conditions are prevailing.
We reiterate that this is NOT a Market wherein we can aggressive short until it
closes below its 200-DMA and ALSO its filters. Until that happens, the wisest
thing that a retain investor can do is to hang on, and let such chaos pass
through. The patience is being tested. It is important to note that this is the
major reason for relative underperformance vis-à-vis the global markets.
All and all, such volatile conditions may prevail until a
day or two more, but it is strongly advised to refrain from shorts until the
Markets breaches the levels mentioned. The way, shorts should be refrained,
aggressive additions to existing positions too should be avoided. It is best
advised to maintain patience and liquidity and sit through such chaotic
conditions. Overall, cautious optimism is advised for today.
Milan
Vaishnav,
Consulting
Technical Analyst,
+91-98250-16331
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