Market Update for 22nd July 2019 by Imtiaz Merchant

Market gave a catastrophic close on Friday and broke its short term trend down, all this happened due to multiple reasons, poor corporate earnings, global cues were negative followed by no major policy changes by the government on economic front and Budget failed to enthuse the market. Going forward it appears that market will go down further to test initially 11100 on the Nifty and subsequently it can go down as low as 10600, this can be reversal point because of valuation and stocks will be available at cheap prices, however in the short run any rise in the market will be used by the investor to sell stocks, hence a prolonged corrective action is quite likely, it appears that market will have a U shape recovery and a protracted range bound trade is not ruled out. Investors should exercise caution and remain at least 20% to 30% in cash until market stabilizes, nevertheless investor should exit from weak and under performing stock in the rally and try to remain in quality stock, that is having least leverage, good governance and consistent growth.      

Technical– Technically market look poised for more downside the first important support for the market is placed at 11100, but the asset test support lies at 10600 and as long as market is above this level there is good hope for the bull to come back. On the higher side 11720 is first important resistance followed by 11800, market may come out form the woods only if it manages to close above 11800 and stays there. The short term range for the market is 11300 – 11700 and the Inter mediate range is between 11100 and 11800. Movement in either direction beyond this range will determine the further trend.