Daily Market Trend Guide -- Monday, July 27, 2015

MARKET REPORT                                                                                 July 27, 2015

The Markets spent a directionless session in the first half but continued to correct in the second half while ending the day with modest losses once again. The Markets opened on a mildly negative note and remained negative throughout the session. The Markets traded with much capped losses in the first half of the session heading nowhere and trading in sideways trajectory. It was in the second half that the Markets weakened further. It slipped from its range it was trading in and after spending some time again in a range, the Markets slipped further to form the day’s low of 8513.50. Some minor recovery was seen and the Markets finally ended the day at 8521.55, posting a modest loss of 68.25 points or 0.79% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, JULY 27, 2015

 Today, the Markets are poised on a very critical juncture and today’s movement is likely to impact its trend in the immediate short term. The Markets are likely to see a negative opening and might open out of the channel on the lower side and test its all important support zone of 8425-50 levels. The Markets are to react to important news flows like AP Shah report on MAT, SEBI being instructed with regard to P-Notes issues, etc. However, we will keep our discussion with regard to technical position of the Markets vis-à-vis these issues.

For today, the levels of 8560 and 8595 will act as important resistance for the Markets. Supports for the Markets exist at 8475 and 8430 levels.

The RSI—Relative Strength Index on the Daily Chart is 54.8456 and it remains 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 Weekly Charts, Weekly RSI is 53.5096 and this too remains neutral as it shows no bullish or bearish divergence or any failure swings. The Weekly MACD too has turned bullish as it has reported a positive crossover and now trades above it signal line.

On the derivative front, rollovers have commenced and the NIFTY July future have shed over 7.11 lakh shares or 3.44% in Open Interest whereas the August series have added over 4.77 lakh shares or 18.71% in Open Interest. The NIFTY PCR stands at 1.06 as against 1.15 on the previous day.

Coming to pattern analysis, as mentioned often in our previous editions of Daily Market Trend Guide, the Markets are trading in a rising channel formed after forming lows of 8000-levels. The Markets are likely to see a lower opening today and might open below the lower rising support line. This may induce temporary weakness in the immediate short term. However, the Markets might test its 100-DMA supports but in the same breath, if we read along the F&O data, the weakness might be temporary and we may see improvement as w e move ahead in the session.

Overall, the Markets are likely to see a lower opening but at the same time as lead indicators suggest, the Markets may see improvement as the session progresses. Even if the weakness persists at the Close levels, the week may remain overall stable as suggested by lead indicators on the Weekly Charts. Further, rollovers being as we enter the rollover month and this may keep the Markets dominated with rollovers as well. We reiterate the advice to keeping overall exposure limited while maintaining cautious outlook on the Markets.

Milan Vaishnav,
Consulting Technical Analyst

Af. Member: Market Technicians Association, (MTA), USA
Af. Member: Association of Technical Market Analysts, (ATMA), INDIA
www.EquityResearch.asia
http://milan-vaishnav.blogspot.com

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