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Nifty Nearing its 200 Day Moving Average…

Monday, March 28, 2011

NSE India : S&P CNX Nifty - Daily Market Report for: Monday (January 10, 2011) By Dominic Rebello

Review of the Previous day:
The Nifty rose substantially on Friday (March 25, 2011) a net 131.85 points (2.39%) and closed at the 5654 point level. The market opened up with a gap at the 5588 points level. It then declined marginally and registered the day’s low at the 5561 points level at 9.49 a.m. It then rose sharply and registered the days high at the 5667 points level at 3.08 p.m.  It then turned into a range bound movement until closing at the day. The Nifty remained above its previous close throughout the day and moved in a range of 106 points. The Nifty closed at a two month high and above the psychologically important 5650 points level. Sentiment was extremely bullish and amongst the 50 Nifty stocks, 47 were gainers, while just 3 were losers. All the sectoral indices closed in the green. Heavy buying was witnessed in IT, technology, realty, banking, capital goods, power and FMCG stocks.

Technical Analysis:

Volume (Qty shares) increased 4.40%. This change is small and indicates a moderate participation by investors.

Market Breadth:

Overall Market Breadth on the NSE was positive. Amongst all the traded stocks, 946 were gainers, 508 were losers and 49 remained unchanged.

Slow Stochastic Indicator:
The Slow Stochastic Oscillator has risen 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 rose and crossed above the 60 level and is now rising (positive if it continues).

MACD Indicator:

The MACD rose above zero and is rising (positive 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 diverging (positive if it continues). The ADX is rising while the Market Index is rising, which indicates that the present up trend is increasing in strength.

Moving Averages (Trend Indicators)
The index:

Is above its 5-day average (at 5487) Positive; Is above its 15-day average (at 5480) Positive; Is above its 25-day average (at 5463) Positive; Is below its 200-day average (at 5688) Negative.

Overall Market Strength/Weakness:

The indicators and oscillators discussed here are indicating a strong market with a positive 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 5750 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 = 5627 (This is the level where the trend is likely to change during intra-day).
Support (1) = 5588.
Support (2) = 5521.
Resistance (1) = 5694.
Resistance (2) = 5734.

Outlook for Today:
On Japanese candlestick patterns the index has formed a fourth consecutive and long white body candle on higher volumes. The body of this candle is above and outside the body of the previous candle indicating a range expansion and acceleration. This is positive.
Further, the 5 days moving average has crossed above the 15 and 25 days moving averages in a single day. This is positive and a buy signal. Moreover, the velocity parameters are also positively trended. All these indicate a positive bias and the possibility of a further up move unfolding.
Incidentally, the index is nearing its 200 days average, which is at the 5688 points level. There is a possibility that the index could face some resistance there. However, if it crosses above it then a further sharp rise can be expected. Investors are advised to hold long positions.


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