Internals suggest near-term direction still up

CNBC-TV18s Head-Markets Research, Anuj Singhal: As expected and as I wrote yesterday in my article, the markets did see a reaction after the 17% rally and with global markets not in a good shape this morning, the reaction is all set to continue and Nifty may see a slow drift towards 4350 mark. Would be interesting to see if bulls buy this decline or as I expect, the Nifty goes down to 4200-4300 before we see fresh pick up

But if we were to take these daily movements in our stride, the near-term outlook for market still looks positive. At least internals suggest that. Crude is behaving itself, Nifty futures are at a premium, the PCR is inching up every day and FIIs have started buying in cash market also, while they have been buyers in F&O market for some time now

Another interesting aspect has been the way Nifty July and August futures have converged and hence the roll cost is almost nil, resulting in high rollovers for Nifty futures till now at about 21%. This is a long series, which goes till the last day of the month.

In individual stocks, RNRL has had a very strong run with stock gaining 46% in 3 days with huge OI build-up. It may have some more legs, but profit booking would be advisable especially if it opens firm today also. On the other hand, Satyam is the weakest stock right now with relative underperformance of 26% compared to Nifty. While some short covering may not be ruled out, if the market turns weak, you might see some more punishment for the stock

DISCLAIMER: The author is not allowed to trade in equity markets including Futures and Options. His only exposure to capital markets is via shares of TV18 and Network18 granted to him as ESOPs by the company and investments in some long-term mutual funds.