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Adopt A Wait And Watch Policy

Thursday, September 10, 2015

NSE India: CNX Nifty — Daily Market Report for: Thursday (September 10, 2015)  
(Based on the activity of the previous trading day) by Dominic Rebello

Review of the Previous day:
The Nifty rose substantially on Wednesday (September 09, 2015) a net 130.35 points (1.70%) and closed at the 7818 point level. The market opened up with a gap at the 7805 points level. It then declined and registered the day’s low at the 7764 points level at 10.49 a.m. The index then rose sharply and registered the day’s high at the 7846 points level at 1.10 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 82 points and closed above the psychologically important 7800 points level. Sentiment was extremely 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 metal, auto and realty stocks.

Technical Analysis:

Volume (Qty shares) increased 10.85%. This change is moderate and indicates a moderate participation by investors.

Market Breadth:
Overall Market Breadth on the NSE was positive. Amongst all the traded stocks, 1203 were gainers, 249 were losers and 28 remained unchanged.

Slow Stochastic Indicator:
The Slow Stochastic Oscillator has risen in the over-sold zone.
The Slow K line in the Stochastic Oscillator has risen above the slow D line (positive and a buy signal).

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 but is now 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 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 7708) Positive.
Is below its 15-day average (at 7874) Negative.
Is below its 25-day average (at 8117) Negative.
Is below its 200-day average (at 8422) Negative.

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

Support Levels:
For short-term traders the immediate main support is at the 7552 points level.
The next support is at the 7431 points level.

Resistance Levels
The immediate main resistance is at the 7982 points level.
The next resistance is at the 8187 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 = 7810 (This is the level where the trend is likely to change during intra-day).
Support (1) = 7773.
Support (2) = 7728.
Resistance (1) = 7855.
Resistance (2) = 7891.

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 day moving average. Further, the velocity parameters which were negatively trended have now turned neutral. Both these indicate a This is positive bias.

Incidentally, these may be the first signs of a bottoming out pattern. A crossover by the index above the 15 days average will confirm the same. Investors are advised to adopt a wait and watch policy, until a clear reversal signal is visible..

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