MARKET REPORT
July 31, 2013
The Markets had a thoroughly disappointing session yesterday
after it reacted negatively to RBI announcements as it saw selling pressure
after the announcements coming in and went on to end the day near its lowest
point. The Markets opened on a flat note and moved absolutely flat and sideways
until the RBI announcements came in. It reacted momentarily in volatile manner
as it gave its day’s high of 5861.30. However, after this, it very quickly
pared its gains and traded flat. The pressure on the Markets intensified in the
second half as the Markets gradually kept losing ground. It went on to give the
day’s low of 5747.60 as it came off over 110-odd points from its day’s high. No
major recovery was seen from these lows and the Markets ended the day at
5755.05, posting a net loss of 76.60 points or 1.31%.
MARKET TREND FOR TODAY
The Markets have ended the day yesterday below its 200-DMA
and is likely to see a flat opening again today. Given the derivative figures,
the Markets may attempt to find its bottom after initial flat to mildly
negative trade. Under such formations, like yesterday, the intraday trajectory
would continue to remain utmost important. It is important to note at this
juncture that the Markets are defying the technicals and the F&O data which
have suggested heavy resistance to such down move.
For today, the levels of 5853 and 5890 are immediate
resistance on the Charts. The supports come in at 5725 and 5690 levels.
The RSI—Relative Strength Index on the Daily Chart is
39.6983 and it has reached its lowest value in last 14-days. However, unlike
last few days, it has NOT shown any bearish divergence today. The Daily MACD continues
to trade below its signal line.
On the derivative front,
the NIFTY August futures have shed over 7.86 lakh shares in Open
Interest and this is not a good sign. This suggests that some long unwinding
has been done and it needs to be seen now if this gets replaced with fresh
longs.
It is important to note at this juncture that during the
last entire week, the Markets have acted in total defiance to the technicals
and the lead indicators. Even it has defied what the F&O data has
suggested. Even when some shedding of some OI has been reported, it is very
important to note that almost all components of NIFTY and BANKNIFTY now
stands heavily OVERSOLD. Given this, if we purely consider the technicals the
downside remains limited.
Given the above reading, the best option for a retail
trader / investor is to stick to the technical picks and use this recent
downside to accumulate good blue chips which are being traded with hammered
prices. Shorts should still be avoided as a pullback now seem imminent and can
happen any time. This time is best to pick up select stocks as selective out
performance is bound to happen. While maintaining adequate liquidity, very
selective purchase should be made and cautious optimism is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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