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Adopt A Wait And Watch Policy

Tuesday, September 01, 2015

NSE India: CNX Nifty — Daily Market Report for: Tuesday (September 1, 2015)  
(Based on the activity of the previous trading day) by Dominic Rebello

Review of the Previous day:
The Nifty fell marginally on Monday (August 31, 2015) a net 30.65 points (0.38%) and closed at the 7971 point level. The market opened up with a gap at the 8009 points level. It then declined into the red and then turned into a range bound movement until 10.20 a.m. The index then rose sharply into the green and registered the day’s high at the 8043 points level at 11.25 a.m. The index then declined sharply into the red and registered the day’s low at the 7947 points level at 2.11 p.m. It then rose and then turned into a range bound movement until closing at the day. The Nifty witnessed a volatile session, moved in a range of 96 points and closed below the psychologically important 8000 points level. Sentiment was bearish and amongst the 50 Nifty stocks 28 were losers, while 22 stocks closed in the green. Substantial buying was witnessed in healthcare stocks, while substantial selling was witnessed in power, realty and Infrastructure stocks.

Technical Analysis:

Volume (Qty shares) decreased 9.44%. This change is moderate and indicates a moderate participation by investors.

Market Breadth:
Overall Market Breadth on the NSE was negative. Amongst all the traded stocks, 625 were gainers, 820 were losers and 40 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 below the 30 level and is now declining (negative 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 and both lines are flat. No signal here.
The ADX is rising while the Market Index is falling, which indicates that the present down trend is increasing in strength.

Moving Averages (Trend Indicators)
The index:

Is above its 5-day average (at 7918) Positive.
Is below its 15-day average (at 8213) Negative.
Is below its 25-day average (at 8327) Negative.
Is below its 200-day average (at 8447) Negative.

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 7724 points level.
The next support is at the 7586 points level.

Resistance Levels
The immediate main resistance is at the 8187 points level.
The next resistance is at the 8269 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 = 7988 (This is the level where the trend is likely to change during intra-day).
Support (1) = 7932.
Support (2) = 7892.
Resistance (1) = 8027.
Resistance (2) = 8083.

Outlook for Today:
On Japanese candlestick patterns the index has formed a third consecutive doji pattern. This indicates that the indecisiveness amongst investors continues. 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 day moving average. Further, the velocity parameters too are turning positive. Both these indicate a positive bias.

But, the index is still below its 15, 25 and 200 day moving averages and all the three averages are declining. This is negative. As such these are mixed signals. Investors are advised to adopt a wait and watch policy until a clear  pattern emerges.

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