Markets to be rangebound and volatile
The markets moved higher and recorded fresh closing highs on the back of sustained buying support last week. The smooth implementation of GST helped improve the market sentiment. The breadth of the market remained positive amidst high volumes, which is a positive sign for the markets.
The FIIs remained net sellers in the cash segment but were seen hedging their positions by remaining net buyers in the derivatives segment. Moreover, the DIIs continued to remain net buyers during the week. Crude oil prices remained volatile, trading between $44-49. The geopolitical tensions on the Korean peninsula and the India-China standoff continue to remain a sore point for the global markets. The earnings season is about to start and will weigh on the market sentiment. The monsoon session of Parliament will begin from 12 July 2017 and there is likelihood of banking reform announcements. Technically, the prevailing positive technical conditions still hold good. The KST and RSI are both placed above their respective averages on the daily chart. Further, the RSI is placed above its average on the weekly chart. The Nifty is placed above its 50-day SMA, 100-day SMA and 200-day
SMA. The Nifty’s 50-day SMA is placed above its 100-day and 200-day SMA, its 100-day SMA is placed above its 200-day
SMA indicating a ‘golden cross’ breakout. These positive technical conditions could lead to regular buying support.
The prevailing negative technical conditions, however, still hold good. The MACD and Stochastic are both placed below their respective averages on the daily and weekly charts. Further, the KST is also placed below its average on the daily chart. The Stochastic is placed in the overbought territory on the daily chart while the RSI is placed in the overbought zone on the weekly chart. These negative technical conditions could lead to intermediate bouts of profit-booking and selling pressure especially at higher levels.
The +DI line is placed above the ADX line and the -DI line and is also placed above the 30 level, which indicates that buyers are gaining strength. However, the ADX line is still languishing around 20, which indicates that the current trend does not have strength and a see-saw movement is
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The Nifty has managed to sustain above the 9638 mark, which augurs well for the markets. If it continues to sustain above it, then it may test the 9750 mark. If it fails, then it could slide down to test the 9524-9500 levels followed by 9300. The market sentiment remains cautious ahead of the earnings season and geo-political tensions on the border with China and the tensions between USA and North Korea. The monsoon session of the Parliament will start soon and hopefully further reforms will be announced along with the election of the new President. The overall trend is likely to remain rangebound and choppy amidst stock-specific action. Index management has continued with the Nifty recording new closing highs. 9500 and 9350 remain crucial support levels for the Nifty. In the meanwhile, the markets will take cues from the earnings season, Parliament session, progress of monsoon, Dollar-Rupee exchange rate, global markets and crude oil prices. Technically, the Sensex faces resistance at the 31523, 31725 and 32000 levels and seeks support at the 31000, 30247, 29800 and 29259 levels.The resistance levels for the Nifty are placed at 9710, 9750, 9825 and 9900 while its support levels are placed at 9638, 9524, 9500, 9350,
9275 and 9220.