Weakening rupee, fear of roll-back of the US
stimulus on the back of improving jobless claims and improving consumer
confidence index which is hovering near a five-year high have taken a toll on
market sentiments. The government imposed new restrictions on the foreign
exchange outflows and gold imports on Wednesday adding fuel to dampening market
sentiments. WPI for July came at 5.79% in July against 4.86% in previous month
on the back of high food and fuel costs. All these resulted into heavy sell off
on Friday with Nifty breaking 5500 mark to touch low of 5496, while BSE Sensex
touched low of 18560 before finally settling at 5508 and 18598 levels,
respectively. Till Thursday, FIIs were net buyers and bought to the tune of Rs
0.8 bn and DIIs to the tune of Rs 11.4 bn. Globally, the euro area’s economy
emerged from a record-long recession in the second quarter. Gross domestic
product in the 17-nation euro area expanded 0.3% in the April-June period after
a 0.3% contraction in the previous three months.
Sensex opened the week
at 18898, made a high of 19310, low of 18559 and closed the week at 18598. Thus
it registered a weekly loss of 191 points. At the same time the Nifty opened
the week at 5606, made a high of 5754, low of 5496 and closed the week at 5507.
Thus the Nifty went down by 58 points on a weekly basis.
On the daily charts, both
Sensex and Nifty has formed a big black body on Friday. If we consider the last
three days candles, then it is like an Evening Star pattern which is a bearish
reversal pattern; but it cannot be classified as one as it has occurred in a
downtrend. The bearish candle on Friday has undone the good work of last four
days. On the weekly charts both the indices have formed a black body candle
with a long upper shadow. It shows continuation of bearishness on the weekly
charts and the long upper shadow indicates selling pressure at higher levels.
Market witnessed a
pull-back for four days and it ended after making an intermittent top at Sensex
19310 and Nifty 5754. Last time Nifty managed to bounce back from a low of 5486
which was inside the gap, whereas the Sensex bounced from18551 which was above
this gap. Market has managed to bounce back number of times from above this Gap
but a breach of this gap will signal the end of the long term rally.
This week Sensex tested
both the long term average of 200dma and medium term average of 50dma but was
not able to close above those. This week both the indices are below the short
term average of 20dma (Sensex – 19433 and Nifty – 5778), the medium term
average of 50dma (Sensex – 19343 and Nifty – 5801) and the long term average of
200dma (Sensex – 19345 and Nifty – 5851). Thus the trend in the short term,
medium term and long term timeframe continue to remain bearish.
MACD and ROC both are
negative and continue with their Sell signal. RSI (36) continues in Sell mode
suggesting that the bearish momentum is high. Stochastic Oscillator continues
in Buy mode as %K (32) is above %D. MFI (36) has improved but is still below the
equilibrium line which suggests money flowing out of the market. ADX is around
22 suggesting that the current trend is now gathering strength. The Directional
Indicators continue with its Sell signal as -DI is above +DI. OBV continues to
make lower top lower bottom formation and hence it remains in its Sell mode. Bollinger
band also continues with its Sell signal. Thus majority of the Oscillators points towards bearishness
to continue in the near term.
The Nifty O.I. PCR has reduced
and is now at 0.97. For the current month series, highest Open interest build up
is seen at 5400 Put and 5600 Call. This suggests that the market expects a narrow
trading range with support is at 5400 levels and resistance around 5600 levels.
Friday saw high amount of Call writing at 5500 strike which suggests immediate resistance
to come in at that level.
No comments:
Post a Comment