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Bulls back in control

Wednesday, December 22, 2010

NSE India: S&P Nifty — Daily Market Report for: Wednesday (December 22, 2010)  (Based on the activity of the previous trading day) by Dominic Rebello

Review of the Previous day:
The Nifty rose substantially on Tuesday (December 21, 2010) a net 53.60 points (0.90%) and closed at the 6000 point level. The market opened up with a gap at the 5960 points level on positive global cues. It then rose further to register the days high at the 6007 points level at 3.05 p.m. It then turned into a range bound movement until closing at the day. The Nifty closed above the psychologically important 6,000 points level for the first time in last 12 sessions. It remained above its previous close throughout the day and moved in a range of 47 points. Sentiment was bullish and amongst the 50 Nifty stocks, 32 were gainers, while 18 were losers. Buying was witnessed in metal, banking, realty, oil & gas and auto stocks, while some selling was witnessed in healthcare and technology stocks.
Technical Analysis:   

Volume (Qty shares) increased 8.68%. 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, 914 were gainers, 505 were losers and 49 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 above the 40 level and is now rising (positive if it continues).    
MACD Indicator:   
The MACD is below zero but is rising (positive if it continues). It is above its 9-day Average (positive).   

Outlook for Today:
On Japanese candlestick patterns the index after having formed a doji pattern (indicating indecisiveness amongst investors) has formed a white body candle on higher volumes. In fact, yesterday’s candle is almost like a white body Marubozu candle.  (A White Marubozu forms when the open equals the low and the close equals the high). This is extremely positive and indicates that the bias has shifted towards the buy side of the market.

Further, the 5 and 15 days moving averages have crossed above the 25 days moving average in a single day and now all the four averages (5, 15, 25 and 200) are positively trended. Moreover, the velocity parameters are also positively trended. All these indicate a positive bias and the possibility of a further up move unfolding.

Investors are advised to hold long positions.

ADX Indicator & DI Lines:   

The +DI line is below the –DI line but both lines are converging (positive if it continues).    
The ADX is falling while the Market Index is rising, which indicates that the present up trend is decreasing in strength.

Moving Averages (Trend Indicators)   
The index:

Is above its 5-day average (at 5946) Positive.
Is above its 15-day average (at 5931) Positive.
Is above its 25-day average (at 5926) Positive.
Is above its 200-day average (at 5538) Positive.
Overall Market Strength/Weakness:   
The indicators and oscillators discussed here are indicating a strong market with a positive bias.   
Support Levels:   
For short-term traders the immediate main support is at 5375 marked as S1 (blue line below the Index).
The next support is at 4795 marked as S2 (blue line below the Index).   
Resistance Levels    

The immediate main resistance is at 6357 marked as R1 (red line above the Index).   
Pivot Point Analysis:   
For intra-day traders the support and resistance levels are calculated according to the pivot point theory and are:
Pivot point = 5989 (This is the level where the trend is likely to change during intra-day).
Support (1) = 5971.
Support (2) = 5942.
Resistance (1) = 6019.
Resistance (2) = 6037.

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