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Nifty Surges; Closes Above 7550

Monday, February 01, 2016

NSE India : CNX Nifty — Daily Market Report for: Monday (February 1, 2016) By Dominic Rebello

Review of the Previous day:
The Nifty rose substantially on Friday (January 29, 2016) a net 138.90 points (1.87%) and closed at the 7563 point level. The market opened down with a gap at the 7413 points level. It then declined by a few points and registered the day’s low at the 7402 points level at 9.16 a.m. The index then rose sharply into the green and turned into a range bound movement until 2.35 p.m. It then rose sharply and registered the day’s high at the 7575 points level at 3.17 p.m. and then turned into a range bound movement until closing at the day. The Nifty moved in a range of 173 points and closed above the psychologically important 7500 points level. Sentiment was bullish and amongst the 50 Nifty stocks 39 were gainers, 10 were losers and 1 remained unchanged. All the sectoral indices closed in the green. Substantial buying was seen in consumer durables and healthcare stocks.

Technical Analysis:
Volume (Qty shares) decreased 13.38%. This change is moderate and indicates a moderate participation by investors.

Market Breadth: Overall Market Breadth on the NSE was positive. Amongst all the traded stocks, 900 were gainers, 400 were losers and 30 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 is above the 40 level and is now rising (positive if it continues).

MACD Indicator: The MACD is below zero but is rising (positive if it continues).  It has crossed above its 9-day Average (positive and a buy signal).

ADX Indicator & DI Lines: The +DI line is below the –DI line but both lines are converging (positive if it continues).
The ADX is falling while the Market Index is rising, which indicates that the present up trend is decreasing in strength.

Moving Averages (Trend Indicators)
The index:
Is above its 5-day average (at 7456) Positive.
Has crossed above its 15-day average (at 7457) Positive.
Is below its 25-day average (at 7611) Negative.
Is below its 200-day average (at 8088) Negative.

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

Support Levels: For short-term traders the immediate main support is at the 7224 points level.
The next support is at the 7136 points level.

Resistance Levels: The immediate main resistance is at the 7608 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 = 7514 (This is the level where the trend is likely to change during intra-day).
Support (1) = 7452.
Support (2) = 7341.
Resistance (1) = 7625.
Resistance (2) = 7687.

Outlook for Today:
On Japanese candlestick patterns the index after having formed three consecutive doji patterns has formed a long white body candle. In fact, yesterday's candle is almost like a white body Marubozu candle.  (A White Marubozu forms when the open equals the low and the close equals the high). This is positive and indicates that the bias has shifted towards the buy side of the market. Further, the index has risen above its 15 days moving average, confirming a bottoming out pattern. The index is now above its 5 and 15 days moving averages. Moreover, the velocity parameters are also positively trended. All these indicate a positive bias and the possibility of a further up move unfolding.

Technically, since the downwards risk seems to have reduced, Investors may consider buying in small quantities in shares that are fundamentally sound and have a long- term potential.

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