Daily Market Trend Guide -- Tuesday, July 09, 2013

MARKET REPORT                                                                                      July 09, 2013

So far as yesterday’s session goes, the Markets more or less traded in line with what was analysed in our yesterday’s edition of the Daily Market Trend Guide. The Markets saw lower opening in line with global weakness but came off its lows as the session progressed to close a notch below its 200-DMA. The Markets opened with a modest gap down along with its Asian peers but weakened further in the morning trade to give the day’s low of 5775.55. However, after this, the markets transformed itself into rising trajectory as it attempted to recover from its opening lows. The Markets kept recovering gradually from its lows during the day and managed to recover some half of its losses. It finally ended the day at 5811.55, still posting a net loss of 56.35 points or 0.96% while forming a lower top and lower bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

The Markets have closed a notch below its 200-DMA which is 5832.54 today. Expect the Markets to open on a modestly positive note and look for directions. The opening of the Markets would be around its 200-DMA or bit higher and it would be very critically important to see if the Markets remains above this level after opening. Intraday trajectory would be very important today and the behaviour of the Markets vis-à-vis the levels of 200-DMA would be critically important.

For today, the levels of 5832 and 5880 are immediate resistance levels on the Charts. The supports come in at 5790 and 5760 levels.

The RSI—Relative Strength Index on the Daily Charts is 49.4920 and it shows no bullish or bearish divergence or any failure swings and is therefore neutral. The Daily MACD continues to remain bullish as it trades above its signal line. 

On the derivative front, the NIFTY July futures have shed over 7.96 lakh shares or 5.09% in Open Interest. This is little negative as we see that yesterday’s recovery from the day’s lows have come more from short covering than from fresh buying and there has been net unwinding of positions reported in the derivative segment. It would be important to see that with today’s positive move initially, these are replaced with fresh longs or not.

The overall observation is that the Markets have been consolidating in a range of 70-80-odd points in between its 50-DMA on the upper side and the  100 and 200 on the down side. And during such sessions, for the most of the time, the Markets have added in Open Interest and have recovered from its close below its 200-DMAs twice in the past. Today also, with its current closing a notch below 200-DMA, it would be important to see that it moves past this levels after opening and sustains above that level to avoid any further weakness creeping in.

All and all, the view is clear for the Markets today. It has to move past the levels of 200-DMA which is 5832 and trade above those levels if it has to avoid any further weakness creeping in. The chances of Markets doing this are higher as such. However, for this, the intraday trajectory and the behaviour of the Markets vis-à-vis these levels would be important. While avoiding shorts, trading are advised to remain light on overall positions until directional trend gets clear. Continuance of positive caution is advised.

Milan Vaishnav,

Consulting Technical Analyst,

www.MyMoneyPlant.co.in

http://milan-vaishnav.blogspot.com

+91-98250-16331

milanvaishnav@mymoneyplant.co.in

milanvaishnav@yahoo.com