Bazaaredge.com Market Outlook 02 Aug11

The NSE Nifty shall start with an acute drop towards the critical level 5,480 and later witness sideways trading. The trading range for the day is seen between the first support 5,450 and the first resistance at 5,522. We might not get any clear direction as long as the index shows see-saw movement in this range. The upside breakout above 5,522 may bring more momentum towards the higher target at 5,544. However during the day if 5,450 breaks, further selling pressure may drag the Index towards the major support at 5,418,`

 

US stock markets finished in the red amidst high volatility as positive news of the debt limit agreement was eclipsed by weaker than expected manufacturing data. Stock markets in Asia are trading sharply lower due to negative cues over US economy.``

 

The indices have closed in the lower end of the intraday range as the bulls were unable to offer follow up support at higher levels during the session. The intraday range specified for the Nifty between the 5550 / 5440 held perfectly as the Nifty trended within these levels, thereby validating our intraday levels. The coming session is likely to witness resistance at the 5550 levels on advances above which the 5625 maybe tested The possibility of the upper band being reached is remote. Support is likely at the 5475 levels below which the 5400 maybe seen. The bullish pivot for the session is likely at the 5530 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5500 levels below which declines may occur. Traders must watch these levels for signs of trend determination in the coming session.

 

The daily candle chart of the Nifty shows a third consecutive "spinning top" candle which indicates indecision in the bull and bear camp regarding the trend formation. The downward sloping trendline (not shown) remains a formidable resistance for the bulls to overcome.  The Nifty (spot) must stay above the 5530 levels sustainably with volumes and open interest expansion to rally intraday on Tuesday. On the flip side, sustaining below the 5500 levels may trigger a fresh bout of declines.

 

The key benchmark opened on a firm note tracing firm Asian stocks.

US President Barack Obama's announcement of a framework agreement to lift

the nation's debt ceiling and avert a sovereign default sparked a relief rally.

The market breadth remained strong and indices floated well above the

baseline in the morning session. With investors pocketing the earlier session’s

gains, the indices slowly descended towards the baseline in early afternoon

trade. The market was sharply off the day's high in afternoon trade. In addition,

heavy sell-off was witnessed in the metal sector on the back of weak Chinese

manufacturing data. Nonetheless, the market reversed its direction in the

mid-afternoon session and stabilised in late trade with decent gains. The Sensex

and Nifty closed down by 0.6% each. The mid-cap index remained flat, while

the small-cap index closed down by 0.3%. Among the front runners, L&T,

JP Associates, ONGC, Baja Auto and M&M gained 1–2%, while Jindal Steel,

Sterlite Industries, BHEL, Cipla and HUL lost 0.4–2%. Among mid caps, Godfrey

Phillips, TVS Motor, Manappuram Finance, Cox & Kings and Gujarat Mineral

Development Corp. gained 6–10%, while Himadri Chemicals, Usha Martin,

Bajaj Electricals, Bharat Forge and India Infoline lost 6–7%.

Markets Today

The trend deciding level for the day is 18,325 / 5,518 levels. If NIFTY trades

above this level during the first half-an-hour of trade then we may witness a

further rally up to 18,430 – 18,545 / 5,550 – 5,584 levels. However, if NIFTY

trades below 18,325 / 5,518 levels for the first half-an-hour of trade then it

may correct up to 18,209– 18,104 / 5,485 – 5,453 levels

 

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Disclaimer : This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. And not soliciting any action based upon it. The report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon such. We or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report

 

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