Daily Market Trend Guide -- Wednesday, July 29, 2015

MARKET REPORT                                                                                 July 29, 2015

The Markets remained thoroughly consolidation note with a weak bias as it spent the session in a 50-odd points range and ended the day with modest losses. The Markets saw a positive start but soon pared its gains to trade in the negative territory. However, it soon saw a sharp recovery and the Markets formed its intraday high of 8397.40 in the morning trade. The Markets once again pared its recovery and traded flat again. It was at this juncture and in the second half of the session that the Markets lost its directional bias. After moving sideways, it lost some ground and rapidly went down to form the day’s low of 8321.75. The Markets saw some ranged recovery but more or less remained volatile in a given range. It finally ended the day at 8337, posting a modest loss of 24 points or 0.29% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, JULY 29, 2015

The Markets pose themselves at a critical juncture today and are expected to open on a flat to mildly positive note. The Markets trades  below both of its 100 & 200 DMA and it is now expected to take support at its 50-DMA which is 8342 today. This would be a very important support levels to watch out for and any breach at Close levels will see some weakness in the Markets in the immediate short term.

The levels of 8390 and 8450 are immediate resistance levels for the Markets. The supports come in at 8300 and 8250 levels.

The RSI—Relative Strength Index on the Daily Chart is 43.4810 and it has reached its lowest value in last 14-days which is bearish. RSI has set a fresh 14-day low whereas NIFTY has not yet do so and this is Bearish Divergence. The Daily MACD remains bearish as it trades below its signal line.

On the derivative front, rollovers continued as NIFTY July futures shed over 30.93 lakh shares or 17.23% in Open Interest. August series added over 44.93 lakh shares or 87.50% in Open Interest. There has been net addition of over 13 lakh shares in NIFTY indicating beginning of fresh short build up in the system.

Coming to pattern analysis, the Markets have fallen below and breached the rising channel that it was trading in. It is expected to take support at its 50-DMA at Close levels in order to avoid any weakness. It has done so yesterday and it is expected to do so today as well. It is very important to note that the behaviour of the Markets vis-à-vis the levels of 50-DMA would be critically important to watch out for and any breach of this level will induce temporary short term weakness in the Markets.

All and all, having said this, apart from watching the 50-DMA levels at Close, the Markets will also remain dominated with rollover centric activities as we enter the penultimate day of expiry of current series. We continue to reiterate on our advice of refraining from any fresh exposure and maintain liquidity in the immediate short term with cautious outlook for the day.

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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