Analyst Somesh View (Closing Comments - 30th July 2020)

Analyst Somesh View (Closing Comments - 30th July 2020)

Nifty ended 100 points lower, continuing the downtrend for a second consecutive session and again formed a bearish candle on daily chart.

After opening higher, Nifty hit an intraday high of 11299 in the morning but wiped out all gains in afternoon to touch the day's low of 11084 before signing off the session with a loss of 100 points at 11102.

Nifty got off to a strong start on the July series expiry day but the bears ate up the gains in the lunch session amid weak global cues and selling in banking & financials.

If expiry was the reason for the fall in the index and doesn’t witness a follow through selling in the next session, then the Nifty shall remain sideways with upsides being capped in the 11300/11350 zone.

Global markets faded as a status quo in policy by the US Fed Reserve failed to offset tepid business outlook and resurgence in virus cases around the world. Indian markets also closed in the negative, in spite of a positive opening. Unlock 3.0 failed to enthuse, as earnings results took priority and markets turned volatile in the expiry session. 

Financials led the losses for the benchmark index. Investors will be looking at commentary emerging from today’s meeting between the PM and key economic regulators. Stock specific action expected to continue.

Markets traded volatile and settled with a cut of over half a percent on the F&O expiry day. Initially, the benchmark opened with an uptick, led by supportive global cues however the selling pressure in the latter half trimmed all the gains and pushed the index in the red. 

Weakness may be slowly creeping in the Nifty as it closed below the ascending trendline, which is in progress from last March lows of 7511 and has offered support to prop up the prices higher on multiple occasions in recent past. However, last 26 sessions of price behaviour chalked out an ascending channel with multiple touch points whose support is placed around 11000 level.

If the Nifty slips below 11084 in the next session, then initially the corrective swing shall get extended to 11000 and if it breaches this channel support, then it shall accelerate downwards towards its 20 day Exponential  moving average whose value is placed at around 10917.

Traders are advised to adopt a wait and watch kind of approach in the next session without attempting a trade.

Except pharma and IT other sectoral indices ended in the red, while Midcap and Smallcap indices end marginally lower.

- Someshwar, Technical analyst, Equidius Research