NSE India: S&P Nifty — Daily Market Report for: Thursday (June 7, 2012)
(Based on the activity of the previous trading day) by Dominic Rebello
Review of the Previous day:
The Nifty rose substantially on Wednesday (June 06, 2012) a net 133.80 points (2.75%) and closed at the 4997 point level. The market opened up with a gap at the 4886 points level and that level itself was the low of the day. It then rose steadily during the session and registered the day’s high at the 5010 points level at 2.58 p.m. It then turned into a range bound movement until closing at the day. Hopes of a rate cut by RBI and strong positive global cues helped the index to remain above its previous close throughout the session. Sentiment was extremely bullish and amongst the 50 Nifty stocks 47 were gainers, while just 3 stocks closed in the red. All the sectoral indices closed in the green. Heavy buying was seen in auto, capital goods, power, banking, FMCG and metal stocks.
Technical Analysis:
Volume:
Volume (Qty shares) increased 38.41%. This change is substantial and indicates a wide participation by investors.
Market Breadth:
Overall Market Breadth on the NSE was positive. Amongst all the traded stocks, 1120 were gainers, 310 were losers and 72 remained unchanged.
Slow Stochastic Indicator:
The Slow Stochastic Oscillator has risen in the neutral zone.
The Slow K line in the Stochastic Oscillator has risen above the slow D line (positive and a buy signal).
RSI Indicator:
The RSI rose and crossed 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).
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:
Has crossed above its 5-day average (at 4894) Positive.
Has crossed above its 15-day average (at 4907) Positive.
Has crossed above its 25-day average (at 4942) Positive.
Is below its 200-day average (at 5064) Negative.
All the four averages are negatively trended. Negative.
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 4724 marked as S1.
The next support is at 4542 marked as S2.
Resistance Levels
The immediate main resistance is at 5228 marked as R1.
The next resistance is at 5743 marked as R2.
Pivot Point Analysis:
For intra-day traders the support and resistance levels are calculated according to the pivot point theory and are:
Pivot point = 4965 (This is the level where the trend is likely to change during intra-day).
Support (1) = 4919.
Support (2) = 4840.
Resistance (1) = 5043.
Resistance (2) = 5089.
Outlook for Today:
On Japanese candlestick patterns the index after having formed a doji pattern (indicating indecisiveness amongst investors) has formed a long white body candle on substantially 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 positive and indicates that the bias has shifted towards the buy side of the market.
Further, the index has crossed above the 5, 15 and 25 day’s moving averages in a single session. Moreover, the velocity parameters, which were negatively trended, have now turned positive. All these indicate a positive bias and the possibility of a further up move unfolding. Technically, since the downwards risk seems to have reduced, Investors may consider buying in small quantities in shares that are fundamentally sound and have a long- term potential.