Market ended on a weak note for the second consecutive day on the back of huge sell-off seen in the Asian markets like Shanghai and Hang Seng which ended down 5% and 2.7% respectively. The Sensex ended 158 points lower at 15,173 but at one point the Sensex had lost close to 3 %. The Nifty fell 50 points to finish at 4,513 but had hit an intraday low of 4,421. All the sectoral indices ended in red barring Oil & Gas and IT. Huge selling was witnessed in realty, banking, metal, power, telecom, capital goods and FMCG stocks. The breadth was negative and the markets recorded highest turnover ever, total turnover increased 39% to Rs 1,47,352 cr. as against Rs 1,05,933 cr. The Aug Nifty future ended with a 10 points premium at 4,523.

Tomorrow being the July F&O expiry markets could trade extreme volatile as it was today. Today’s volatility was due to the huge sell-off witnessed in the Shanghai and Hang Seng market which ended down 5% and 2.7% respectively. Now going forward if Hang Seng index breaks decisively and trades below the 20K mark then there is a high chance that it may test 18300 levels and for the Shanghai index which has almost doubled from its low of 1,664 on 28th Oct’08 to its new high of 3,454 which was hit today. This index is extremely overbought and if we look at the retracement from its low to the top the first levels comes to 2,950. So there is a healthy correction expected in the Asian market in the near term.

But if we compare with Indian markets, Indian markets have shown strong resilience compare to Asian market. The earning seasons have been very great as most results were above expectations and there is huge liquidity sitting on the sideline to be invested on the decline. So we don’t see a major breakdown in the Indian markets. The current outlook is bit cautious as there is no fresh buying witnessed at higher levels and markets are under a strong selling pressure around the 4600 mark. So going forward markets could correct a bit and consolidate for some time before giving a fresh breakout.

Nifty has strong support at 4410 levels, unless we see a break below this point markets are safe and healthy and every fall is a buying opportunity. If nifty trades below 4410 decisively then we could see panic selling happening and markets could test 4260 levels. On the higher side 4560-4610 is the major resistance levels.

STOCK IDEA:

1) ABAN (1009) – Huge short covering witnessed in this counter, structure looks positive, can be bought on dips with a trading stop-loss of 980-960 for a target of 1090-1225. Unless we see a break below 915 which is its 50-day moving average we don’t see any major weakness in this counter.

2) IFCI (50.40) – Counter showing strong resilience at lower level, can be bought with a trading stop-loss of 48, if maintains above 51 then look for a target of 55-58.

3) ROLTA (148) – Structure looks positive and is breaking its consolidation phase, resistance at 153, if maintains above then look for a target of 170. Stop-loss should be placed at 139.

Nifty future daily chart (4,512): Nifty future is still holding its important support level of 4410 as shown below and going forward if we trade below this level then there could be a sharp fall. And for a fresh buying to take place nifty should maintain above 4550. Remain cautious and trade with strict stop-loss as the current trend is very volatile.