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Adopt A Wait And Watch Policy

Thursday, June 11, 2015

NSE India: CNX Nifty — Daily Market Report for: Thursday (June 11, 2015)  
(Based on the activity of the previous trading day) by Dominic Rebello

Review of the Previous day:
The Nifty rose substantially on Wednesday (June 10, 2015) a net 102.05 points (1.27%) and closed at the 8124 point level. The market opened up with a gap at the 8024 points level. It then declined by a point and registered the day’s low at the 8023 points level at 9.16 a.m. The index then rose sharply and turned into a range bound movement until 2.30 p.m. It then rose further and registered the day’s high at the 8152 points level at 2.50 p.m. The index then declined and 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 52 points. Sentiment was bullish and amongst the 50 Nifty stocks 42 were gainers, while just 8 stocks closed in the red. All the sectoral indices closed in the green. Substantial buying was witnessed in IT and capital goods stocks.

Technical Analysis:
Volume:

Volume (Qty shares) increased 4.23%. 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, 980 were gainers, 421 were losers and 72 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 below the slow D line (negative 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 now 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 flat while the Market Index is rising. No signal here.

Moving Averages (Trend Indicators)
The index:

Has crossed above its 5-day average (at 8087) Positive.
Is below its 15-day average (at 8261) Negative.
Is below its 25-day average (at 8260) Negative.
Is below its 200-day average (at 8351) Negative.

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 8075 points level. The next support is at the 7857 points level.

Resistance Levels The immediate main resistance is at the 8444 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 = 8100 (This is the level where the trend is likely to change during intra-day).
Support (1) = 8048.
Support (2) = 7972.
Resistance (1) = 8177.
Resistance (2) = 8229.

Outlook for Today:
On Japanese candlestick patterns the index after having formed a doji pattern has formed a long white body candle on higher volumes. 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 crossed above its 5 day moving average. All these indicate a positive  bias.

However, the index is still below its 15, 25 and 200 day moving averages. Further, the velocity parameters continue to remain negatively trended. Both these indicate a negative bias. As such these are mixed signals. Investors are advised to adopt a wait and watch policy, until a clearer signal emerges.

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