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Adopt A Wait And Watch Policy

Friday, February 07, 2014

NSE India: CNX Nifty — Daily Market Report for: Friday (February 7, 2014) 
(Based on the activity of the previous trading day) by Dominic Rebello

Review of the Previous day:
The Nifty rose marginally on Thursday (February 06, 2014) a net 13.90 points (0.23%) and closed at the 6036 point level. The market opened up with a gap at the 6028 points level. It then rose sharply and registered the day’s high at the 6048 points level at 9.32 a.m. The index then declined sharply into the red and registered the day’s low at the 5965 points level at 10.35 a.m. It then rose steadily into the green and turned into a range bound movement until closing at the day. The Nifty witnessed a volatile session and moved in a range of 83 points. Sentiment was mixed and amongst the 50 Nifty stocks 27 were gainers, while 23 were losers. Substantial buying was seen in FMCG, consumer durables and metal stocks, while selling was witnessed in realty, capital goods, banking, IT and healthcare stocks.

Technical Analysis:

Volume (Qty shares) increased 2.62%. 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, 679 were gainers, 748 were losers and 79 remained unchanged.

Slow Stochastic Indicator:
The Slow Stochastic Oscillator has risen and has exited the over-sold 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 30 level and is now rising (positive if it continues).

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

ADX Indicator & DI Lines:
The +DI line is below the –DI line but both lines are converging (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:

Has crossed above its 5-day average (at 6030) Positive.
Is below its 15-day average (at 6162) Negative.
Is below its 25-day average (at 6186) Negative.
Is above its 200-day average (at 5976) Positive.

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

Support Levels:
For short-term traders the immediate main support is at the 5958 points level.
The next support is at the 5877 points level.

Resistance Levels:
The immediate main resistance is at the 6372 points level.
The next resistance is at the 6424 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 = 6017 (This is the level where the trend is likely to change during intra-day).
Support (1) = 5985.
Support (2) = 5934.
Resistance (1) = 6068.
Resistance (2) = 6100.

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

However, the index has crossed above its 5 days moving average. Further, the velocity parameters which were negatively trended have now turned neutral. Both these indicate a positive bias.

But the index is still below its 15 and 25 days moving averages and both the three averages are declining. This is negative. Investors are advised to adopt a wait and watch policy, until a clear reversal signal is visible.

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