The markets extended their losses for the second consecutive day on the back of monsoon concerns and weak Asian and European cues. The Hang Seng index ended down 523 points or 2.5% and Shanghai shut down 96 point or 2.8%. The Sensex tumbled 354 points or 2.28% to settle at 15,160 after hitting an intra?day low of 15,104 and the Nifty shut at 4,481 down 2.27% or 104 points after making a low of 4465. The broader indices also declined around 2% each. The selling pressure was throughout the day and all sectoral indices ended in the red. Auto, realty and banking stocks led the decline on the bourses today. The market breadth was negative since the early trade. The Aug nifty future ended with 14 points discount at 4467.

Markets have indeed corrected sharply on the back of monsoon concerns. The technical indicator RSI has turned negative but the important 50?day moving average is still holding which is at 4412. The near term trend has turned weak and the trend has now shifted down towards 4200 instead of 4900. This fall could be likely read has a healthy correction for the markets as we have witnessed a strong rally from the lows of 3920 upto 4730.

The outlook for the coming week is cautious as the trend is weak and selling pressure is seen in the strong index pivotal which were leading the previous rally. For the very short term players buying is advisable on dip and should be protected with strict stop?loss of 4380 or 4330. And for investors who have missed this rally can participate around 4250?4010 region from an investment perspective.

For tomorrow’s intra?day trade if nifty breaks 4410 then we could witness more selling pressure and on the higher side 4520?4550 will act as a strong resistance point. Unless we see a break above 4550 this trend will remain weak and one should sell on every rise. The BSE Oil & Gas index is still holding above the important level of 9500 and its major support is at 9280. We believe that stocks pertaining to this space will continue to outperform.

INDEX PIVOTAL:

1) BHEL (2183) – This counter will show more weakness if continues to trade below 2180, crucial support is at 2130 if that level is also breached then look for 2050 where strong support is placed. Below this 1920.

2) ICICI BANK (738) – This stock below 730 will show strong weakness and can be shorted with a stop?loss of 755. Next crucial support is at 715, if that level is broken look for 650 or 620.

3) INFOSYS (2040) – Sell if breaks below 1995 for a target of 1910 with a stop?loss of 2020.

Nifty future daily chart: Nifty future has closed just close to its support level as shown below. Going forward if we trade below 4480 then only we see a major breakout down, the next level could be 4350 or 4220. So we believe one should maintain a cautious view while building position at these levels. This trend could turn positive only if Nifty future maintains above 4610.