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Nifty Consolidates…

Monday, December 06, 2010
By Dominic Rebello

NSE India : S&P CNX Nifty - Daily Market Report for: Monday (December 06, 2010)

Review of the Previous day:

The Nifty fell marginally on Friday (December 03, 2010) a net 18.90 points (0.31%) and closed at the 5992 point level. The market opened on a flat note, but then rose to register the days high at the 6025 points level at 10.25 a.m. It then declined and turned into a range bound movement until 1.00 p.m. It then declined to register the low of the day at the 5964 points level at 1.59 p.m. It then rose and range bound movement until closing at the day. After rising for four consecutive sessions the market witnessed some consolidation and closed just below the psychologically important 6000 points level. The Nifty moved in a range of 61 points. Sentiment seemed bearish and amongst the 50 Nifty stocks, 27 were losers, while 23 were gainers. Buying was witnessed in IT, auto and FMCG stocks, while selling was witnessed in realty, consumer durables, metal, banking, power and oil & gas stocks.

Technical Analysis:

Volume (Qty shares) decreased 6.10%. This change is moderate and indicates a moderate participation by investors.

Market Breadth:

Overall Market Breadth on the NSE was negative. Amongst all the traded stocks, 260 were gainers, 1178 were losers and 24 remained unchanged.

Slow Stochastic Indicator:

The Slow Stochastic Oscillator is in the neutral zone.

 The Slow K line in the Stochastic Oscillator is above the slow D line (positive if it continues).

 RSI Indicator:

The RSI is above the 40 level but is now declining (negative if it continues).

MACD Indicator:

The MACD is below zero but is rising (positive if it continues). It is at its 9-day Average (neutral).

ADX Indicator & DI Lines:

The +DI line is below the –DI line and both lines are flat (No signal here).

The ADX is falling while the Market Index is falling, which indicates that the present down trend is decreasing in strength.

Moving Averages (Trend Indicators)

The index:

Is above its 5-day average (at 5931) Positive.

Is above its 15-day average (at 5939) Positive.

Is below its 25-day average (at 6045) Negative.

Is above its 200-day average (at 5486) Positive.

Overall Market Strength/Weakness:

The indicators and oscillators discussed here are indicating a strong market but with a neutral bias.

Support Levels:

For short-term traders the immediate main support is at 5375 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 6357 marked as R1 (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 = 5994 (This is the level where the trend is likely to change during intra-day).
Support (1) = 5963.
Support (2) = 5933.
Resistance (1) = 6024.
Resistance (2) = 6055.

Outlook for Today:

On Japanese candlestick patterns the index has formed a second consecutive doji pattern. This indicates that the indecisiveness amongst investors continues. The next candle formation will confirm whether the bias is towards the buy or sell side of the market.

However, the index is above its 5, 15 and 200 days moving averages. Further, the 5 days moving average and 200 days moving averages are rising. Moreover, the velocity parameters are also positively trended. All these indicate a positive bias and the possibility of an up move unfolding.
Investors are advised to hold long positions.

Work with strict stop losses on all positions.


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