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Avoid Buying At Current Levels

Thursday, March 12, 2015

NSE India: CNX Nifty — Daily Market Report for: Thursday (March 12, 2015)  
(Based on the activity of the previous trading day) by Dominic Rebello

Review of the Previous day:
The Nifty fell marginally on Wednesday (March 11, 2015) a net 12.10 points (0.14%) and closed at the 8699 point level. The market opened up with a gap at the 8728 points level. It then turned into a range bound movement until 2.05 p.m. The index then rose sharply into the green and registered the day’s high at the 8755 points level at 2.26 p.m. It then declined sharply into the red and registered the day’s low at the 8682 points level at 3.17 p.m. and then turned into a range bound movement until closing at the day. The Nifty witnessed a volatile session and moved in a range of 73 points. Sentiment was bearish and amongst the 50 Nifty stocks 31 were losers, while 19 stocks closed in the green. Substantial buying was witnessed in infrastructure stocks, while substantial selling was witnessed in metal stocks.

Technical Analysis:

Volume (Qty shares) decreased 1.64%. 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, 524 were gainers, 929 were losers and 33 remained unchanged.

Slow Stochastic Indicator:
The Slow Stochastic Oscillator has declined and has entered 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 is above the 40 level but is now declining (negative if it continues).

MACD Indicator:
The MACD is above zero and is declining (negative if it continues). It is below its 9-day Average (negative).

ADX Indicator & DI Lines:
The +DI line is above the –DI line and both lines are flat. No signal here.
The ADX is falling while the Market Index is falling, which indicates that the present down trend is decreasing in strength.

Moving Averages (Trend Indicators)
The index:

Is below its 5-day average (at 8805) Negative.
Is below its 15-day average (at 8828) Negative.
Is below its 25-day average (at 8777) Negative.
Is above its 200-day average (at 8093) Positive.

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

Support Levels:
For short-term traders the immediate main support is at the 8608 points level.
The next support is at the 8509 points level.

Resistance Levels:
The immediate main resistance is at the 8989 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 = 8713 (This is the level where the trend is likely to change during intra-day).
Support (1) = 8670.
Support (2) = 8639.
Resistance (1) = 8743.
Resistance (2) = 8786.

Outlook for Today:
On Japanese candlestick patterns the index has formed a third consecutive but small black body candle. This is negative.

Further, the 5 day moving average has dropped below the 15 day moving average. This is negative and a sell signal. The  index is below its 5, 15 and 15 day moving averages. Moreover, the velocity parameters too indicate weakness. All these indicate a negative bias and the possibility of a further decline unfolding. Investors are advised to avoid buying at current levels.

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