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.