Mar­ket turns ten­ta­tive

Money Times - - Front Page - By San­jay R. Bha­tia

Last week, the mar­kets moved higher in the trun­cated trad­ing week on the back of pos­i­tive news flow. The Nifty man­aged to close above its 50-day SMA, which is a pos­i­tive sign. How­ever, the mar­kets fell sharply on Fri­day fol­low­ing the res­ig­na­tion of In­fosys CEO Vishal Sikka cou­pled with weak global cues. How­ever, the Nifty man­aged to close above the 9800 mark. The FIIS re­mained net sell­ers in the cash seg­ment but were seen hedg­ing their po­si­tions as net buy­ers in the de­riv­a­tives seg­ment. The DIIS, how­ever, re­mained net buy­ers dur­ing the week. The breadth of the mar­ket re­mained pos­i­tive amidst low vol­umes, which in­di­cates lack of con­fi­dence at higher lev­els. Crude oil prices re­mained sub­dued and traded be­tween $48-52. The US mar­kets, too, wit­nessed profit-book­ing and sell­ing pres­sure along with other global mar­kets on the back of geopo­lit­i­cal ten­sions aris­ing out of North Korea. On the do­mes­tic front, the earn­ings sea­son painted a mixed pic­ture. Tech­ni­cally, the pre­vail­ing pos­i­tive tech­ni­cal con­di­tions helped the Nifty bounce back above its 50-day SMA. The Stochas­tic is placed above its av­er­age on the daily chart. Fur­ther, the Nifty is still 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 at lower lev­els. How­ever, the pre­vail­ing neg­a­tive tech­ni­cal con­di­tions still hold good. The MACD, KST and RSI are all placed below their re­spec­tive av­er­ages on the daily and weekly charts. Fur­ther, the Stochas­tic is placed below its av­er­age on the weekly chart. These neg­a­tive tech­ni­cal con­di­tions could lead to sell­ing pres­sure es­pe­cially at higher lev­els. The -DI line is placed above the ADX line and the +DI line is also above 35, which in­di­cates that the sell­ers are gain­ing strength. How­ever, it has also come off its re­cent highs, which in­di­cates that sell­ers are cov­er­ing shorts reg­u­larly. The Nifty has closed around 9838, which is a pos­i­tive sign. How­ever, the mar­ket sen­ti­ment has turned ten­ta­tive es­pe­cially with man­age­ment is­sues at In­fosys, which is the big­gest con­trib­u­tor to the bench­marks.

The buy­back news on In­fosys will be keenly watched.

Now, it is im­por­tant that the Nifty moves and closes above the 9915 level for sell­ing pres­sure to ease and to re­sume the uptrend and test the psy­cho­log­i­cally im­por­tant 10000 level. If the Nifty fails to move and sus­tain above 9915, then fur­ther sell­ing pres­sure may be wit­nessed and it could test the 9790 mark, where its 50-day SMA is placed.

In­ter­me­di­ate bouts of volatil­ity and chop­pi­ness are likely to be wit­nessed.

In the mean­while, the mar­kets will take cues from the earn­ings sea­son, Par­lia­ment ses­sion, global mar­kets, Dol­lar-

Ru­pee ex­change rate and crude oil prices.

Tech­ni­cally, the Sen­sex faces re­sis­tance at the 31610, 32273 and 32325 lev­els and seeks sup­port at the 30921, 30680 and 29365 lev­els. The re­sis­tance lev­els for the Nifty are placed at 9838, 9915, 10000 and 10115 while its sup­port lev­els are placed at 9790, 9638 and 9500.

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