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Market Slumps Again…

Monday, April 18, 2011

NSE India : S&P CNX Nifty — Daily Market Report for: Monday (April 18, 2011) By Dominic Rebello

Review of the Previous day:
The Nifty fell substantially on Friday (April 15, 2011) a net 86.95 points (1.47%) and closed at the 5824 point level. The market opened down with a gap at the 5898 points level. It then rose marginally and registered the days high at the 5907 points level at 9.16 a.m. It then declined sharply and registered the days low at the 5806 points level at 12.06 p.m. It then rose marginally and turned into a range bound movement until closing at the day. The Nifty remained below its previous close throughout the day and moved in a range of 101 points. Disappointing EPS guidance by IT bellwether Infosys for FY12 and the rise in inflation figures were the main reasons for the sell off. Sentiment was bearish and amongst the 50 Nifty stocks, 41 were losers, while 9 were gainers. Some buying was witnessed in auto, capital goods and consumer durables stocks, while heavy selling was witnessed in IT, technology, realty and banking stocks.

Technical Analysis:
Volume:

Volume (Qty shares) decreased 5.29%. 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, 532 were gainers, 920 were losers and 40 remained unchanged.

Slow Stochastic Indicator:
The Slow Stochastic Oscillator has declined and has exited the over bought 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 now declining (negative if it continues). It is above its 9-day Average (positive).

ADX Indicator & DI Lines:
The +DI line is above the –DI line and both lines are flat. No signal here.
The ADX is rising while the Market Index is falling, which indicates that the present down trend is increasing in strength.

Moving Averages (Trend Indicators)
The index:
Has dropped below its 5-day average (at 5849) Negative.
Is above its 15-day average (at 5800) Positive.
Is above its 25-day average (at 5660) Positive.
Is above its 200-day average (at 5724) 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 5135 marked as S1 (blue line below the Index).The next support is at 4795 marked as S2 (blue line below the Index).

Resistance Levels
The immediate main resistance is at 5982 marked as R1 (red line above the Index).The next resistance is at 6357 marked as R2 (red line above the Index).

Pivot Point Analysis:
For intra-day traders the support and resistance levels are calculated according to the pivot point theory and are:
Pivot point = 5846 (This is the level where the trend is likely to change during intra-day).
Support (1) = 5785.
Support (2) = 5745.
Resistance (1) = 5886.
Resistance (2) = 5947.

Outlook for Today:
On Japanese candlestick patterns the index after having formed a long white body candle has formed a long black body candle. This is negative. Further, the index has dropped below the 5 days moving average, which is declining. Moreover, the velocity parameters which were positively trended have now turned neutral. All these indicate a negative bias
However, the index continues to remain above its 15, 25 and 200 days moving averages and all the three averages are rising. This is positive. As such these are mixed signals. Investors are advised to hold long positions but with a strict stop loss at the 15-day average at the 5800 point’s level.

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