MARKET REPORT
August 06, 2013
The Markets had a flat session yesterday as it defined the
globally stable environment to trade volatile and end the day with minor gains.
The Markets opened on a mildly positive note against the expectations of a
strong start and after briefly trading in a capped range, went on to give the
day’s high of 5721. However, this level was not sustained as the Markets pared
all of its gains to trade flat in the afternoon trade. The second session of
the trade saw the Markets heading nowhere as it moved / remained in a much
capped range. It spent rest of the session in such state and finally ended the
day absolutely flat at 5685.40, posting a minor gains of 7.50 points or 0.13%
while forming a lower top and higher bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
Today’s analysis remains more or less similar to that of
yesterday. However, the Markets are expected to open on a mildly negative note
and look for directions. Today’s opening levels would again see the Markets
testing its pattern support and it would be important to see if it sees
improvement post opening. The intraday trajectory would remain important and it
would be important for the Markets to remain near its pattern supports to avoid
further weakness.
For today, the levels of 5725 and 5760 are immediate
resistance on the Charts. The supports come in at 5650 and 5615 levels.
The lead indicators continue to remain neutral. The RSI—Relative
Strength Index on the Daily Chart is 36.1294 and it is neutral as it shows no
bullish or bearish divergence or any kind of failure swings. The Daily MACD
continues to trade below it’s signal line.
On the derivative front, the NIFTY August futures shed
little over 2.05 lakh or 1.33% in Open Interest. This is not a major shedding
of open interest, but this still, needs to be replaced with longs if the
Markets have to make a sustainable up move.
Having said this, again, the reading remains similar to that
of our yesterday’s edition of Daily Market Trend Guide. Over 90% of the
components of NIFTY, BankNIFTY, CNX MIDCAP remain nearly OVERSOLD and therefore
any further dip may increase the chances of short covering if not buying from
lower levels.
All and all, given this reading it is VERY important to note
that with any further dip in the Markets, a pullback, somewhat sharp is now
long over due and quite imminent. However, we would advice to maintain
liquidity and status quo on the positions rather than buying as the directional
trend still remains without any consensus. Shorts may be strictly avoided.
Overall, the chances of the Markets taking support after a negative opening are
high and therefore cautious outlook with little optimism is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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