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Avoid Buying At Current Levels

Monday, June 23, 2014

NSE India : CNX Nifty — Daily Market Report for: Monday (June 23, 2014) By Dominic Rebello

Review of the Previous day:
The Nifty fell marginally on Friday (June 20, 2014) a net 29.25 points (0.39%) and closed at the 7511 point level. The market opened flat at the 7543 points level. It then turned into a range bound movement until 11.18 a.m. The index then rose sharply and registered the day’s high at the 7560 points level at 11.50 a.m. It then declined and turned into a range bound movement until 1.55 p.m. The index then declined sharply into the red and registered the day’s low at the 7497 points level at 3.00 p.m. The index then rose and turned into a range bound movement until closing at the day. The Nifty witnessed a volatile session and moved in a range of 63 points. Sentiment was bearish and amongst the 50 Nifty stocks 38 were losers, while 12 stocks closed in the green. Substantial buying was witnessed in consumer durables stocks, while selling was witnessed in healthcare, auto, PSU, capital goods, power, metal, oil & gas and banking stocks.

Technical Analysis:
Volume (Qty shares) increased 5.27%. This change is small and indicates a moderate participation by investors.

Market Breadth: Overall Market Breadth on the NSE was negative. Amongst all the traded stocks, 601 were gainers, 975 were losers and 32 remained unchanged.

Slow Stochastic Indicator: The Slow Stochastic Oscillator has declined in the neutral zone.
The Slow K line in the Stochastic Oscillator is below the slow D line (negative if it continues).

RSI Indicator: The RSI fell and crossed below the 60 level and is now declining (negative if it continues).

MACD Indicator: The MACD is above zero but is declining (negative if it continues). It is below its 9-day Average (negative).

ADX Indicator & DI Lines: The +DI line is above the –DI line but both lines are converging (negative if it continues).
The ADX is flat while the Market Index is falling. No signal here.

Moving Averages (Trend Indicators)
The index:
Is below its 5-day average (at 7555) Negative.
Has dropped below its 15-day average (at 7542) Negative.
Is above its 25-day average (at 7442) Positive.
Is above its 200-day average (at 6410) Positive.
All the four averages are positively trended. Positive.

Overall Market Strength/Weakness: The indicators and oscillators discussed here are indicating a neutral market but with a negative bias.

Support Levels: For short-term traders the immediate main support is at the 7043 points level.
The next support is at the 6846 points level.

Resistance Levels: The immediate main resistance is at the 7497 points level.
The next resistance is at the 7569 points level.

Pivot Point Analysis: For intra-day traders the support and resistance levels are calculated according to the pivot point theory and are:
Pivot point = 7523 (This is the level where the trend is likely to change during intra-day).
Support (1) = 7486.       Support (2) = 7460.
Resistance (1) = 7549.  Resistance (2) = 7586.

Outlook for Today:
On Japanese candlestick patterns the index has formed a third consecutive but small black body candle on higher volumes. This is negative.

Further, the index has dropped below its 15 days moving average. The index is now below its 5 and 15 days moving averages. Moreover, the velocity parameters too indicate weakness. All these indicate a negative bias and the possibility of a further decline unfolding. Investors are advised to avoid buying at current levels.

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