MARKET REPORT
August 02, 2013
The crises at NSEL spoiled the show yesterday as it made the
otherwise buoyant Markets pare its gains and converted the session into a
volatile one and the Markets again ended modestly into the red for the seventh
day in a row. The Markets opened on a positive note on expected lines and soon
gave its day’s high of 5808.50 in the morning trade. However, with the news
coming in of the crises developing at NSEL, the Markets reacted negatively to
it. It not only pared its gains to trade flat, but also dipped further into the
negative to give the day’s low of 5676.85. It recovered though from those
levels to trade flat. It spent the rest of the session in a sideways trajectory
and finally ended the day at 5727.85, posting a net loss of 14.15 points or
0.25% while forming a higher top and almost similar bottom on the Daily High
Low Charts.
MARKET TREND FOR TODAY
There has been a deviance from the performance of the Global
Markets which closed strong yesterday and our Markets. Today’s analysis remains
more or less similar to that of yesterday. As evident from the chart, the
Markets have held on to the pattern supports and today, we can expect the
Markets to open on a positive note and look for directions. It would be
important for the Markets to maintain this pattern support. Global environment
is quite supportive of this.
For today, the levels of 5808 and 5825 are immediate
resistance levels on the Charts. The supports come in at 5675 and 5640 levels.
The RSI—Relative Strength Index on the Daily Chart is
38.1672 and it has reached its lowest value in last 14-days. However, it does not show
any bearish divergence. The Daily MACD continues to trade below its signal
line.
However, on the Candles, Engulfing pattern has occurred. If the engulfing bearish pattern occurs during a
downtrend (which appears to be the case with NIFTY), it may be a last
engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the
next candle closes above the bottom the current (black) candle's real body.
On the Derivative front, NIFTY August futures have
shed over 2.84 lakh shares or little over 1.70% in Open Interest. This although
shows some shedding of positions, but at the same time, this has been less
intensive than previous sessions. It would be important to see that these gets
replaced with fresh longs.
Important to note here again is that as mentioned in our previous edition of Daily
Market Trend Guide, almost all components of BankNIFTY, NIFTY and CNX MIDCAP
have gone deeply oversold. This is bound to led support at lower levels and
would go a long way in helping the Markets hold on to the mentioned pattern
support.
All and all, positive opening likely today and it
would be important for the Markets to maintain those opening gains and
capitalize on that. With the Markets trading near supports and with potential
signs of pullback which is long overdue and imminent, it is advised to strictly
avoid shorts. At the same time, too much of aggressive longs too should be
avoided as the directional trend is yet not clear. However, with bias remaining
towards imminent pullback, cautious optimism is continued to be advised.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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