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Adopt A Wait And Watch Policy

Wednesday, May 06, 2015

NSE India: CNX Nifty — Daily Market Report for: Wednesday (May 6, 2015)  
(Based on the activity of the previous trading day) by Dominic Rebello

Review of the Previous day:
The Nifty fell marginally on Tuesday (May 05, 2015) a net 11.25 points (0.14%) and closed at the 8320 point level. The market opened flat at the 8338 points level. It then declined and  turned into a range bound until 10.25 a.m. The index then rose sharply and registered the day’s high at the 8355 points level at 10.59 a.m. It then declined sharply into the red and registered the day’s low at the 8280 points level at 1.18 p.m. The index then rose and turned into a range bound to close the day on a flat note. The Nifty witnessed a volatile session and moved in a range of 75 points. Sentiment was bearish and amongst the 50 Nifty stocks 30 were losers while 20 stocks closed in the green. Substantial buying was witnessed in metal stocks.

Technical Analysis:

Volume (Qty shares) increased 2.48%. 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, 671 were gainers, 784 were losers and 39 remained unchanged.

Slow Stochastic Indicator:
The Slow Stochastic Oscillator has risen 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 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 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 flat while the Market Index is flat. No signal here.

Moving Averages (Trend Indicators)
The index:

Is above its 5-day average (at 8271) Positive.
Is below its 15-day average (at 8428) Negative.
Is below its 25-day average (at 8491) Negative.
Is above its 200-day average (at 8275) Positive.

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

Support Levels:
For short-term traders the immediate main support is at the 8172 points level.
The next support is at the 7857 points level.

Resistance Levels
The immediate main resistance is at the 8609 points level.
The next resistance is at the 8523 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 = 8319 (This is the level where the trend is likely to change during intra-day).
Support (1) = 8282.
Support (2) = 8244.
Resistance (1) = 8357.
Resistance (2) = 8394.

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 is above its 5 and 200 day moving averages and both the averages are rising. Further, the velocity parameters too indicate strength. Both these indicate a positive bias.

But, the index iis below its 15 and 25 day moving averages and both the averages are declining. This is negative. Investors are advised to adopt a wait and watch policy, until a clearer signal emerges.

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