MARKET REPORT July
31, 2014
What seemed to be a session of one more correction turned
out to be positive one for the Markets as it saw a rally in the second half of
the session and ended the day with modest gains. The Markets opened a modestly
negative note and it drifted in a sideways manner in the morning trade while
trading with capped gains. It drifted lower by afternoon trade while it touched
its day’s low of 7707.60. Just when it seemed the correction could widen, the
Markets saw a sharp spurt from lower levels. It not only recovered all of its
losses but also traded in the positive
territory. It went to form a day’s high of 7798.70. After hovering around those
levels, it finally ended the day at 7791.40, posting a net gain of 42.70 points
or 0.55% while forming a similar top and lower bottom on the Daily High Low
Charts.
MARKET TREND FOR TODAY
Today is the expiry day of the current derivative series and
expect the Markets to remain dominated with rollover activities. The Markets
are expected to open on a flat and quiet note and look for directions. Due to
expiry, some volatility may remain and the intraday trajectory would be
important for the Markets to decide the trend. It may be noted that the Markets
are witnessing a formation of a pattern called Broadening Formation.
Today, the levels of 7820 and 7860 would act as immediate
resistance for the Markets. The supports would come in at 7680 and 7640 levels.
The RSI—Relative Strength Index on the Daily Chart is
61.9023 and it is neutral as it shows no bullish or bearish divergence or any
failure swings. The Daily MACD remains bullish as it trades above its signal
line.
On the derivative front, the NIFTY July futures have shed
over 22.65 lakh shares or 18.97% in Open Interest whereas the August futures
added 37.06 lakh shares or 59.39% in Open Interest.
Going by pattern analysis, as evident from the Daily Charts, the Markets are witnessing
formation of a pattern called “Broadening Formation”. This often exhibits a top
which is higher than its preceding top and a bottom lower than its preceding
bottom. This means that the Markets may continue to witness advances but may
see no runaway rise and it has overall bearish implication in the immediate
short term.
Overall, going by this reading, it is strongly advised to
keep booking and protecting profits at higher levels. More attention should be
paid to booking profits and fresh purchases should be kept very limited and
stock specific. Overall, while maintaining more liquidity and less of exposure,
cautious outlook is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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