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Avoid Buying At Current Levels

Thursday, October 29, 2015

NSE India: CNX Nifty — Daily Market Report for: Thursday (October 29, 2015) 
(Based on the activity of the previous trading day) by Dominic Rebello

Review of the Previous day:
The Nifty fell moderately on Wednesday (October 28, 2015) a net 61.70 points (0.75%) and closed at the 8171 point level. The market opened down with a gap at the 8188 points level. It then rose and registered the day’s high at the 8209 points level at 9.50 a.m. The index then declined and turned into a range bound movement until 2.13 p.m. It then declined sharply and registered the day’s low at the 8131 points level at 2.46 p.m. The index then rose and turned into a range bound movement until closing at the day. The Nifty remained below its previous close throughout the session and moved in a range of 77 points and closed below the psychologically important 8200 points level. Sentiment was bearish and amongst the 50 Nifty stocks 31 were losers, while 19 stocks closed in the green. Substantial buying was witnessed in consumer durables stocks, while substantial selling was witnessed in banking, power and realty stocks.

Technical Analysis:
Volume:

Volume (Qty shares) increased 14.21%. 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, 583 were gainers, 843 were losers and 44 remained unchanged.

Slow Stochastic Indicator:
The Slow Stochastic Oscillator has declined in the neutral 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 but is declining (negative if it continues). It is above its 9-day Average (positive).

ADX Indicator & DI Lines:
The +DI line is below the –DI line and both lines are diverging (negative if it continues). 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 8242) Negative.
Has dropped below its 15-day average (at 8203) Negative.
Is above its 25-day average (at 8094) Positive.
Is below its 200-day average (at 8379) 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 7790 points level. The next support is at the 7552 points level.

Resistance Levels:
The immediate main resistance is at the 8345 points level. The next resistance is at the 8475 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 = 8171 (This is the level where the trend is likely to change during intra-day).
Support (1) = 8132; Support (2) = 8093.
Resistance (1) = 8210; Resistance (2) = 8248.

Outlook for Today:
On Japanese candlestick patterns the index has formed a second 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 had dropped below its 15 day moving average. The index is now below its 5, 15 and 200 day moving averages. Further, the velocity parameters which were positively trended have now turned neutral. 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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