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Avoid Buying At Current Levels

Friday, June 12, 2015

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

Review of the Previous day:
The Nifty fell substantially on Thursday (June 11, 2015) a net 159.10 points (1.96%) and closed at the 7965 point level. The market opened up with a gap at the 8157 points level. It then rose further and registered the day’s high at the 8163 points level at 9.22 a.m. The index then declined sharply into the red and turned into a range bound movement until 2.50 p.m. It then declined further and registered the day’s low at the 7958 points level at 3.26 p.m. and then turned into a range bound movement until closing at the day. The Nifty moved in a range of 205 points and closed below the psychologically important 8000 points level. Sentiment was extremely bearish and amongst the 50 Nifty stocks 46 were losers, while just 4 stocks closed in the green. All the sectoral indices closed in the red. Substantial selling was witnessed in banking and auto stocks.

Technical Analysis:
Volume:

Volume (Qty shares) increased 14.14%. This change is substantial and indicates a wide participation by investors.

Market Breadth:
Overall Market Breadth on the NSE was negative. Amongst all the traded stocks, 268 were gainers, 1177 were losers and 31 remained unchanged.

Slow Stochastic Indicator:
The Slow Stochastic Oscillator has declined 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 fell and crossed below the 40 level and is now declining (negative if it continues).

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

ADX Indicator & DI Lines:
The +DI line is below the –DI line and both lines are diverging (negative if it continues).
The ADX is flat while the Market Index is falling.

Moving Averages (Trend Indicators)
The index:

Has dropped below its 5-day average (at 8054) Negative.
Is below its 15-day average (at 8230) Negative.
Is below its 25-day average (at 8256) Negative.
Is below its 200-day average (at 8353) Negative.

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 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 = 8029 (This is the level where the trend is likely to change during intra-day).
Support (1) = 7895.
Support (2) = 7824.
Resistance (1) = 8100.
Resistance (2) = 8234.

Outlook for Today:
On Japanese candlestick patterns the index has formed a long black body candle on substantially higher volumes. In fact yesterday’s candle is almost like a Black Marubozu candle. (A Black Marubozu forms when the open equals the high and the close equals the low). This is negative.

Further, the index has dropped below its 5 day moving average. The index is now below its 5, 15, 25 and 200 day moving averages. Moreover, the velocity parameters continue to remain negatively trended. 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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