NSE India: CNX Nifty — Daily Market Report for: Friday (January 8, 2016)
(Based on the activity of the previous trading day) by Dominic Rebello
Review of the Previous day:
The Nifty fell substantially on Thursday (January 07, 2016) a net 172.70 points (2.23%) and closed at the 7568 point level. The market opened down with a gap at the 7673 points level. It then rose by a point and registered the day’s high at the 7674 points level at 9.16 a.m. The index then declined steadily throughout the session and registered the day’s low at the 7556 points level at 3.19 p.m. and then 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 118 points and closed below the psychologically important 7600 points level. Sentiment was extremely bearish and all the 50 Nifty stocks closed in the red.
Volume: Volume (Qty shares) decreased 13.63%. 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, 152 were gainers, 1329 were losers and 16 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 40 level and is now declining (negative if it continues).
MACD Indicator: The MACD is below zero and is declining (negative if it continues). It has crossed below its 9-day Average (negative and a sell signal).
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)
Is below its 5-day average (at 7769) Negative.
Is below its 15-day average (at 7833) Negative.
Is below its 25-day average (at 7784) Negative.
Is below its 200-day average (at 8172) 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 7539 points level. The next support is at the 7423 points level.
Resistance Levels: The immediate main resistance is at the 7981 points level. The next resistance is at the 8147 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 = 7600 (This is the level where the trend is likely to change during intra-day).
Support (1) = 7525; Support (2) = 7482.
Resistance (1) = 7643; Resistance (2) = 7718
Outlook for Today:
On Japanese candlestick patterns the index has formed a fourth consecutive and long black body candle. 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. Moreover, the 5 day moving average has crossed below the 25 day moving average. The velocity parameters too indicate weakness. All these indicate a negative bias and the possibility of a further decline unfolding. Incidentally, the index is approaching a major support level at the 7539 points level. There is a possibility that the index could find some support and reverse from there. However, if it declines below it, then a further decline could be expected. Investors are advised to avoid buying at present levels.