Daily Market Trend Guide -- Wednesday, July 22, 2015

MARKET REPORT                                                                                 July 22, 2015

The Markets took a violently corrective turn after trading on a flat note in the first half of the session and ended the day with losses. The Markets saw a positive opening and trade modestly positive in the morning trade while it formed its day’s high of 8646.75. The Markets predictably continued to resist to the rising trend line levels. After this, the Markets retraced back and traded absolutely flat in a very ranged and sideways trajectory. It traded sideways until the later part of the afternoon trade. It was only in the last hour and half of the trade that the Markets took a corrective turn and rapidly pared itself. It dipped into negative territory and extended its losses. It went on to form the day’s low of 8517.90, coming off nearly 125-odd points from the high point of the day. No recovery was seen and the Markets finally settled the day at 8529.45, posting a net loss of 74 points or 0.86% while forming a higher top but lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, JULY 22, 2015

The Markets are likely to see a modestly negative opening and trade negative in the opening trade. The Markets are likely to continue to remain in corrective mode and there are chances that it continues to remain in this corrective mode for the immediate short term and go near to its testing its 100-DMA. The Markets are perfectly resisting the channel as mentioned in our previous edition of the Daily Markets Trend Guide and are in the consolidation mode for the immediate short term.

For today, the levels of 8600 and 8640 are immediate resistance levels for the Markets. The supports come in at 8460 and 8440 levels.

The RSI—Relative Strength Index on the Daily Charts is 58.2131 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD continues to remain bullish as it trades above its signal line.

On the derivative front, the NIFTY July futures have shed over 7.07 lakh shares or 3.03% in Open Interest. This signifies some unwinding of long positions and profit taking. The NIFTY PCR stands at 1.16 as against 1.21.

Coming to pattern analysis, the Markets are in consolidation mode as it is resisting to a upward rising extended trend line drawn from the bottoms of 8000-levels. This is minor trend resistance but as mentioned in our previous edition of Daily Market Trend Guide, it is enough to cause the Markets to consolidate and put it is minor corrective mode. The immediate major resistance for the Markets exist at its 100-DMA and if the weakness persist, then there are chances that the Markets test this level. However, it would still be within a rising channel and any fresh up move shall occur only after the Markets moves past the 8650 levels with conviction.

Overall, some weakness is likely to persist in the initial trade and the intraday trajectory that the Markets form would be crucial to watch out for. The Markets will have to improve post negative opening otherwise any further weakness will have the Markets test its 100-DMA. In given scenario, it is advised to refrain from making fresh purchases until the directional call gets clear and the Markets shows some signs of slowing down in consolidation. Overall, while maintaining liquidity, cautious outlook is advised for today.

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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