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Market looks weak and is likely to slide further down. The Nifty can come down to test the support range between 5367 and 5341; however, we do not envisage a close below the major support level of 5355. On the contrary, today being the fifty day of this current downswing it may stage a recovery rally on the back of short covering-more so, because today is the settlement day for the July clearing of derivatives.

The international cues are mixed: Dow fell from the day’s high by 50 points to close at 10498. Nasdaq lost ground by just above 1% to close at 2265 and the S&P 500 closed at 1106; Asian markets are emitting mixed signals with most of them are in the red while some are marginally in the green. The major ones like Japan, Hong Kong, Singapore, Taiwan, South Korea and Australia are trading in the negative territory as we write this Market Outlook.

Chances are we would also be testing lower levels between 5368 and 5341 as hinted above. Thus, initially some weakness is only expected. If the major heavy weight Reliance does not fall below the 1000-mark, it can put quite a bit of pressure on the Nifty.

Any weak close, even if it be above the Nifty level of 5355 but below yesterday’s close of 5397 would signal continued weakness and then we need to watch out tomorrow’s trading activity fairly closely to get a some more clarity towards a possible termination of the erstwhile intermediate uptrend that began from the low of May 25 at 4786 for the index.

Unless the weekly close tomorrow happens above the Nifty level of 5450, the overhang of weakness would remain.

Rajat K. Bose