Mar­ket at cross­roads

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

Al­though the mar­kets touched new his­toric highs last week, they fi­nally cor­rected af­ter fail­ing to move above the 10500 mark. The Nifty fell just 10 points short of the mag­i­cal fig­ure. Weak global cues along with pre­vail­ing over­bought con­di­tions led to a mar­ket cor­rec­tion.

Once again, the FIIs turned net sell­ers in the cash and de­riv­a­tives seg­ment. How­ever, the DIIs turned buy­ers again and were seen sup­port­ing the mar­kets dur­ing the week. The breadth of the mar­ket re­mained weak amidst low vol­umes. The earn­ings sea­son has largely been in line with ex­pec­ta­tions. Crude oil prices inched higher on fresh con­flicts build­ing be­tween UAE, Libya and Iran. Global mar­kets, too, re­mained jit­tery due to the Gulf cri­sis. Tech­ni­cally, the pre­vail­ing neg­a­tive tech­ni­cal con­di­tions weighed on the mar­ket sen­ti­ment lead­ing to sell­ing pres­sure.

The MACD, Stochas­tic, KST and RSI are all placed be­low their re­spec­tive av­er­ages on the daily and weekly charts. Fur­ther, the Stochas­tic is placed in the over­bought zone on the weekly chart. These neg­a­tive tech­ni­cal con­di­tions could lead to bouts of profit-book­ing and sell­ing pres­sure es­pe­cially at higher lev­els.

The pre­vail­ing pos­i­tive tech­ni­cal con­di­tions, how­ever, still hold good. The Stochas­tic is placed in the over­sold zone on the daily chart. More­over, the Nifty is placed above its 50-day SMA, 100day 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 ADX line, +DI line and –DI line are all at cross­roads and a break­out is awaited in ei­ther of them in­di­cat­ing a vo­latile and choppy trend till some clar­ity emerges. The Nifty has set­tled be­low the 10400 mark, which does not au­gur well for the mar­ket sen­ti­ment. It is im­por­tant for the Nifty to move and sus­tain above this level for fresh buy­ing to emerge and to test the 10500 mark. If the Nifty fails to do so, then sell­ing pres­sure is likely to con­tinue and it could test the 10124 level, which is an im­por­tant sup­port level fol­lowed by 9955.

The mar­ket is ner­vous due to the geopo­lit­i­cal events in the

Gulf, which led to a sharp spike in crude oil prices. Crude oil price be­yond $66-68/bar­rel is likely to have a neg­a­tive im­pact on the In­dian econ­omy. With the earn­ings sea­son com­ing to an end with no neg­a­tive sur­prises, the mar­kets will keenly watch the turn of events in the Gulf and Korean penin­sula. The gov­ern­ment con­tin­ued to re­duce GST rates.

In the mean­while, the mar­kets could take cues from the earn­ings sea­son, geopo­lit­i­cal news flow, global mar­kets, Dol­lar-Ru­pee ex­change rate and crude oil prices. Tech­ni­cally, the Sen­sex faces re­sis­tance at the 33750, 34000 and 34500 lev­els and seeks sup­port at the 33300, 33000, 32325, 32000, 31610, 30921, 30680 and 29365 lev­els.

The re­sis­tance lev­els for the Nifty are placed at 10325, 10400, 10462, 10500 and 10575 while its sup­port lev­els are placed at 10270, 10200, 10138, 10100, 10000 and 9955.

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