MARKET REPORT
July 04, 2013
The Markets took a larger than expected cut yesterday as it
opened negative in line with global markets but weakened further during the day
to end the day with a deep cut. The Markets opened on a negative note following
weakness in global markets and after trading with capped losses, slipped
further in the afternoon trade to give the day’s low of 5760.40. After making
this low, the Markets headed nowhere as it kept trading in a 20-odd point
range. This continued until the end of the session. The markets finally ended
the day at 5770.90, posting a deep cut of 86.65 points or 1.48% while forming a
sharply lower top and lower bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
The Markets opened sharply lower below its 200 and 100-DMA
yesterday and therefore, these levels would act as immediate resistance for
today. Expect the Markets to open on a modestly positive note and we are
expected to see some respite from the weakness that we have been seeing from
the past two sessions. The Markets are expected to open modestly positive and
look for directions. Minor pullback cannot be ruled out.
For today, as mentioned above, the Markets will fact
immediate resistance at 5828 and 5845 which is the 200 and 100-DMA of the
Markets respectively. The Markets will have to move past these levels in order
to continue to attempt reversal.
The lead indicators still do not show any kind of weakness
on daily charts. The RSI—Relative Strength Index on the Daily Chart is 47.1810
and it does not show any failure swings or any bullish or bearish divergence
and is therefore neutral. The Daily MACD is continues to remain bullish as it
trades above its signal line.
On the derivative front, NIFTY July futures have reported a
net decrease of 3.28 lakh shares or 2.24% in open interest. This is a little
negative as it suggests some unwinding of positions. However, this needs to be
replaced with fresh longs for the
pullback to continue. The NIFTY PCR stands at 1.09 as against 1.11
Having said this, as mentioned above, all lead indicators
continue to remain firmly in place and they do not depict any weakness in the
immediate short term. With the
derivative data showing decline in OI, this needs to be replaced with fresh
longs. The likelihood is in this favour as lead indicators firmly remain in
place, however the levels of 5825, and 5845 shall continue to act as immediate
top for the Markets.
All and all, though some signs of weakness were seen in the
F&O figures, no such weakness is seen on the Daily Charts. Further, since
the Markets are moving in a narrow intraday band, we continue to advice to
refrain from shorts as there has been no structural breach on the Charts. Any
such downside should be utilized to make selective purchases as the defensives
will continue to out perform. Overall, cautious but positive outlook is advised
for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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