RBI announced measures to address market conditions
which included open market purchase operations of long dated Government of
India Securities of Rs 8,000 cr, and bringing down their statutory liquidity
ratio in held to maturity (HTM) category from 25% to 23% of their net demand.
This could not stem the fall in rupee and rupee touched its record low at 65.58
against a dollar. Global agency Standard & Poor’s is maintaining negative
outlook on the country as fall in rupee is impacting investor confidence. This
has taken a toll on market sentiments which has taken NSE Nifty to low of 5254
and BSE Sensex to 17760 levels. FIIs remained net sellers to the tune of Rs 30.1 bn, while DIIs
were net buyers to the tune of Rs 15.9 bn. Globally, Japan exports jumped 12.2%
y-o-y in July, highest since 2010, while UK mortgage showed signs of a recovery
in the property market. The US’ property and labour market has also shown signs
of recovery and its Conference Board’s gauge of the outlook for the next three
to six months increased 0.6% after no change in June.
Sensex opened the week
at 18587, made a high of 18587, low of 17759 and closed the week at 18519. Thus
it registered a weekly loss of 79 points. At the same time the Nifty opened the
week at 5497, made a high of 5504, low of 5254 and closed the week at 5471.
Thus the Nifty went down by 36 points on a weekly basis.
On the daily charts,
both Sensex and Nifty formed a Last Engulfing Bottom on Wednesday which is a
bullish reversal pattern. Confirmation for this was given in the form of a
white body candle on Thursday. Friday too managed to form a white body candle.
On the weekly charts, both Sensex and Nifty have formed a Takuri Line formation
which is also a bullish reversal pattern. It belongs to the family of Dragonfly
Doji. The long lower shadow signifies buying at lower levels. Thus both the
daily and weekly charts suggest a pull-back in the short term.
Market managed to
bounce back after making a low of 17759 on the Sensex and 5254 on the Nifty.
Currently we are witnessing a pull-back or retracement of the immediate fall
from Sensex 19392 to 17759 and Nifty 5754 to 5254. One of the most
significant supports for the market, the Bullish Rising Gap between Sensex
18284-18062 and Nifty 5526-5447, was breached last week. Now as per Gap theory
the long term rally is over and the long term trend has also reversed.
This week both Sensex
and Nifty maintained below the long term average of 200dma (Sensex – 19337 and
Nifty – 5844), medium term average of 50dma (Sensex – 19237 and Nifty – 5756)
and the short term average of 20dma (Sensex – 18956 and Nifty – 5620). Thus the
trend in the short term, medium term and long term timeframe continue to remain
bearish.
MACD and ROC both
continue with their Sell signal besides being negative. RSI (42) has moved higher
but is still in Sell mode, suggesting that the bearish momentum is high.
Stochastic Oscillator has given a Buy on Thursday as %K (25) went above %D. MFI
(41) has improved but is still below the equilibrium line which suggests money
flowing out of the market. ADX has improved to around 24 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 0.88. For the current month series, highest Open interest
build up has shifted to 5300 Put and 5600 Call. This suggests that the market
expects a trading range with support at 5300 levels and resistance
around 5600 levels. Friday saw high amount of Put writing at 5400 strike which
suggests immediate support to come in at that level.
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