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Adopt A Wait And Watch Policy

Tuesday, March 31, 2015

NSE India: CNX Nifty — Daily Market Report for: Tuesday (March 31, 2015)  
(Based on the activity of the previous trading day) by Dominic Rebello

Review of the Previous day:
The Nifty rose substantially on Monday (March 30, 2015) a net 150.90 points (1.81%) and closed at the 8492 point level. The market opened up with a gap at the 8390 points level. It then declined by a few points and registered the day’s low at the 8380 points level at 9.24 a.m. The index then rose sharply and turned into a range bound movement until 3.10 p.m. It then rose further and registered the day’s high at the 8504 points level at 3.29 p.m. and then turned into a range bound movement until closing at the day. The Nifty remained above its previous close throughout the session, moved in a range of 124 points and closed just below the psychologically important 8500 points level. Sentiment was bullish and amongst the 50 Nifty stocks 44 were gainers, while just 6 stocks closed in the red. All the sectoral indices closed in the green. Substantial buying was witnessed in capital goods, realty, PSU and FMCG stocks.

Technical Analysis:

Volume (Qty shares) decreased 9.15%. 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, 1204 were gainers, 250 were losers and 33 remained unchanged.

Slow Stochastic Indicator:
The Slow Stochastic Oscillator is in 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 rose and crossed above the 40 level and is now rising (positive if it continues).

MACD Indicator:
The MACD is below zero and is turned flat (positive if it rises). 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 8449) Positive.
Is below its 15-day average (at 8592) Negative.
Is below its 25-day average (at 8696) Negative.
Is above its 200-day average (at 8175) Positive.

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

Support Levels: For short-term traders the immediate main support is at the 8407 points level.

Resistance Levels
The immediate main resistance is at the 8788 points level.
The next resistance is at the 8959 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 = 8459 (This is the level where the trend is likely to change during intra-day).
Support (1) = 8414.
Support (2) = 8335.
Resistance (1) = 8538.
Resistance (2) = 8583.

Outlook for Today:
On Japanese candlestick patterns the index 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. Further, the index has crossed above its 5 day moving average. The index is now above its 5 and 200 day moving averages. Moreover, the velocity parameters which were negatively trended are now turning neutral. All these indicate a positive bias.

However, the index continues to remain below its 15 and 25 day moving averages and both the averages are declining and also negatively trended. This is negative. Investors are advised to adopt a wait and watch policy, until a clearer signal emerges.

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