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Carnage On Dalal Street

Tuesday, August 25, 2015

NSE India: CNX Nifty — Daily Market Report for: Tuesday (August 25, 2015)  
(Based on the activity of the previous trading day) by Dominic Rebello

Review of the Previous day:
The Nifty fell substantially on Monday (August 24, 2015) a net 490.95 points (5.92%) and closed at the 7809 point level. The market opened down with a gap at the 8055 points level. It then rose by a few points and registered the day’s high at the 8060 points level at 9.16 a.m. The index then declined steadily throughout the session and registered the day’s low at the 7769 points level at 3.24 p.m. It then rose and turned into a range bound movement until closing at the day. The Nifty remained below its previous close throughout the session, moved in a range of 291 points and closed below the psychologically important 7950 points level. Sentiment was extremely bearish and all the 50 Nifty stocks closed in the red. All the sectoral indices too closed in the red. Substantial selling was witnessed in realty and oil & gas stocks.

Technical Analysis:

Volume (Qty shares) increased 47.86%. 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, 31 were gainers, 1441 were losers and 22 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 fell and crossed below the 30 level and is now declining (negative if it continues).

MACD Indicator:
The MACD is below zero and is declining (negative if it continues). 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 rising while the Market Index is falling, which indicates that the present down trend is increasing in strength.

Moving Averages (Trend Indicators)
The index:

Is below its 5-day average (at 8288) Negative.
Is below its 15-day average (at 8424) Negative.
Is below its 25-day average (at 8448) Negative.
Is below its 200-day average (at 8458) 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 at the 8214 points level was crossed below yesterday.
The next support is at the 7586 points level.

Resistance Levels
The immediate main resistance is at the 8592 points level.
The next resistance is at the 8667 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 = 7879 (This is the level where the trend is likely to change during intra-day).
Support (1) = 7699.
Support (2) = 7589.
Resistance (1) = 7990.
Resistance (2) = 8170.

Outlook for Today:
On Japanese candlestick patterns the index after having formed a doji pattern 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). The body of this candle is below and outside the body of the previous black body candle. This is negative.

Further, the index is below its 5, 15, 25 and 200 day moving averages and all the four averages are declining. 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 present levels.

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