Mar­kets correct

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

Although the mar­kets touched fresh historic highs last Tues­day, it failed to cap­i­tal­ize on it. Weak global cues, geopo­lit­i­cal ten­sions and over­bought con­di­tions led to reg­u­lar bouts of profit-book­ing and sell­ing pres­sure, which dragged the Nifty be­low the psy­cho­log­i­cally im­por­tant level of 10K. The mar­kets failed to of­fer any re­silience due to lack of fol­low-up buy­ing sup­port at higher lev­els. The breadth of the mar­ket re­mained weak amidst high vol­umes, which is a neg­a­tive sign for the mar­kets.

The FIIs re­mained net sell­ers in the cash and de­riv­a­tives seg­ment. How­ever, the DIIs re­mained net buy­ers dur­ing the week and were seen sup­port­ing the mar­kets. Crude oil prices re­mained volatile amidst hopes of fur­ther pro­duc­tion cuts. The US mar­kets gained dur­ing the week amid the an­nounce­ment of in­ter­est rate hikes in De­cem­ber by the US Fed­eral. On the do­mes­tic front, the FM is work­ing out de­tails to an­nounce a pack­age to boost the sag­ging econ­omy. Tech­ni­cally, the pre­vail­ing neg­a­tive tech­ni­cal con­di­tions weighed on the mar­ket sen­ti­ment. The RSI and KST are both placed be­low their re­spec­tive av­er­ages on the daily and weekly charts. Fur­ther, the Stochas­tic is placed be­low its av­er­age on the daily chart and MACD is placed be­low its av­er­age on the weekly chart. Th­ese neg­a­tive tech­ni­cal con­di­tions could lead to fur­ther bouts of sell­ing pres­sure.

The pre­vail­ing pos­i­tive tech­ni­cal con­di­tions, how­ever, still hold good. The MACD is placed above its av­er­age on the daily chart. Fur­ther, the Stochas­tic is placed above its av­er­age on the weekly chart. More­over, 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 buy­ing sup­port at lower lev­els.

The -DI line has moved above the ADX line and the +DI line and also above 28 on the daily chart, which in­di­cates that sell­ers are gain­ing strength. The ADX line, how­ever, is lan­guish­ing around the 16 mark, which in­di­cates that the cur­rent mar­ket trend lacks strength.

The Nifty has slipped be­low the 10K level and is on the verge of test­ing its 50-day SMA placed at 9953, which does not au­gur well for the mar­kets. It is im­por­tant for the Nifty to sus­tain

In view of the Dussehra Hol­i­day on Satur­day, 30 Septem­ber 2017, the next is­sue of Money Times will be re­leased on Fri­day, 29 Septem­ber 2017.

above its 50-day SMA to ease the sell­ing pres­sure and to wit­ness buy­ing sup­port. The Nifty has formed a neg­a­tive di­ver­gence pat­tern, which could lead to fur­ther sell­ing pres­sure. The mar­ket sen­ti­ment has been hit by the news flow on geopo­lit­i­cal ten­sions across the Korean penin­sula and our slow­ing econ­omy. Any pos­i­tive devel­op­ment on ei­ther side could lead to a smart bounce-back. How­ever, fol­low-up buy­ing sup­port will re­main cru­cial at the higher lev­els. 9953 is an im­port sup­port level. If breached, the Nifty could test 9750.

In the mean­while, the mar­kets will take cues from the geopo­lit­i­cal sit­u­a­tion, global mar­kets, Dol­lar-Ru­pee ex­change rate and crude oil prices. Tech­ni­cally, the Sen­sex faces re­sis­tance at the 32273, 32325, 33000 and 33750 lev­els and seeks sup­port at the 31610, 30921, 30680 and 29365 lev­els. The re­sis­tance lev­els for the Nifty are placed at 10138, 9989, 10179, 10200 and 10275 while its sup­port lev­els are placed at 9953, 9915, 9850 and 9750.

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