MARKET REPORT August
05, 2013
The Markets continued to end the week on a dismal note as on
Friday as well, the NSEL crises as well as the weak Rupee continued to weaken
the sentiments as the Markets once again ended the day on a negative note while
testing its pattern supports. The Markets opened the day on a modestly positive
note and gave its intraday high of 5761.85 in the very early minutes of the
trade. Post that levels, the Markets transformed itself into falling trajectory
and continued to gradually and steadily lose ground for the rest of the
session. It continued to pare those morning gains and dipped into the red by
afternoon. It further weakened and went on to test the pattern supports by
recording day’s low of 5649. Some modest recovery was seen from those levels
and the Markets finally ended the day at 5677.90, posting a net loss of 49.95
points or 0.57% while forming a lower top and lower bottom on the Daily High
Low Charts.
MARKET TREND FOR TODAY
Today’s session would be critically important for the
Markets. The Markets have ended in the red in 8 consecutive sessions in a row
and there has been strong deviation of its performance as compared to the peer
Markets. Over 90% of the Index components stand oversold and a pullback is
imminent especially when the Markets have held on to its pattern support.
Expect the Markets to open on a decently positive note and it would be
critically important for the Markets to maintain those gains.
For today, the levels of 5760 and 5790 are immediate resistance
on the Daily charts. The supports come in at 5650 and 5625 levels.
The lead indicators continue to remain mildly weak. The RSI—Relative
Strength Index on the Daily Chart is 35.3733 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. On a Weekly note, the
Weekly RSI stands at 44.0755 and it is neutral as it shows no negative
divergence or failure swings. The Weekly MACD continues to trade below its
signal line.
On the derivative front, NIFTY August futures have continued
to shed over 9.68 lakh shares or 5.90% in Open Interest. This is certainly a
negative reading. This show clear unwinding of positions. It is critically
important to see that this gets replaced with fresh buying and long positions.
The NIFTY PCR stands at 0.99 as against 1.01.
There are important things to note here. Though
derivative figures show unwinding in form of decreased open positions, we have
categorically mentioned in our last edition of Daily Market Trend Guide that
over 90% of components of NIFTY, Bank NIFTY, CNX MIDCAP, etc., stand OVERSOLD
or nearly oversold. Secondly, the Global Markets have been stable and have
outperformed the Indian Markets. Further to this, with the Markets holding on
to the pattern support and with decently positive opening likely today, we are
likely to see relief rally, at least in the initial trade.
As mentioned, a pullback is now long overdue and imminent.
Today’s session remain critically important and holding on and capitalizing on
the opening gains would be of utmost importance. We continue to advice to
strictly refrain from shorts as there is high likelihood of the Markets taking
support at current levels. Aggressive buys too should be avoided to maintain
adequate liquidity until directional trend gets clear. Overall, though
cautious, but positive outlook is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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