MARKET REPORT July
10, 2014
The yesterday’s session remain quite volatile on expected
lines as the Markets swung heavily on either side ahead of Union Budget today
and ended the day with losses as the caution weighed heavily. The opened on a
flat note and after dipping into the red for a brief while the Markets came
back into the positive territory while forming day’s high of 7650.10. However,
the Markets pared these gains as well again the afternoon trade but traded flat
as it maintained its critical support. The second half and the late afternoon
trade saw some caution returning in the Markets as it saw one more wave of sell
off as the Markets drifted further and went on to form the day’s low of
7551.65. No major recovery was seen and it finally ended the day at 7585,
posting a net loss of 38.20 points or 0.50% while forming a sharply lower top
and lower bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
Today, expect the Markets to open on a modestly positive note
and look for directions. The Markets have failed to give a breakout post 7700
levels. Today, Markets have a Union Budget to react to and this shall keep the
Markets utterly volatile. Though the Markets continues to remain in a trading
range any weakness may have the Markets test 7500 levels again. With the
railway budget remaining a non event and with the Economic Survey painting not
so much of a pretty picture, the caution is likely to weigh high on the
Markets.
For today, the levels of 7610 and 7700 would act as
immediate resistance levels for the Markets today and the supports come in at
7500 and 7410 today.
The lead indicators continue to paint a bearish picture. The
RSI—Relative Strength Index on the Daily Chart is 52.9029 and it has reached
its lowest value in last 14-days which is bearish. Further, the RSI has set a
new 14-period low whereas NIFTY has not yet and this is Bearish Divergence. The
Daily MACD remains bearish as it trades below its signal line.
On the derivative front, NIFTY July futures have shed 99,950
shares or nominal 0.73% in Open Interest and this shows that there has been no
major offloading that took place yesterday. Also not much shorts have been
created as well in the Markets yesterday.
Going by the pattern analysis, the Markets have remaining in
a broad trading range of 7500-7700 on the upper side. The way Markets have not
given a positive breakout on the upside above 7700 levels, it has also not
given a negative break down below 7500 levels.
However, in case of any negative
reactions to the Union Budget today, the Markets may test
7500 levels and any
drift below this will induce some more
weakness in the Markets.
All and all, the session is likely to remain volatile.
Though the Markets may remain range bound in the initial trade it would react
as the Budget proposals start coming in. The second half of the session is likely
to remain much volatile. We continue to reiterate to strictly avoid any fresh
purchases and if at all any purchases are made, it should be limited to
defensives while protecting profits at higher levels. Overall, continuance of highly selective stock specific approach
with high degree of caution is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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