Fol­low-up sup­port needed at higher lev­els

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

The mar­kets wit­nessed a smart rally last week cross­ing the 10600 mark on Fri­day but clos­ing a lit­tle be­low it. The mar­kets re­spected the psy­cho­log­i­cally im­por­tant 10K sup­port level and bounced back with a vengeance. Pos­i­tive news flow on the do­mes­tic front and fall­ing crude oil prices helped im­prove the mar­ket sen­ti­ment. The set­tle­ment of the RBI-Fi­nance Min­istry spat also trig­gered the rally. The FIIs con­tin­ued to be net sellers in the cash seg­ment but re­mained net buy­ers in the de­riv­a­tives seg­ment. The DIIs con­tin­ued to sup­port the mar­kets at the lower lev­els and re­mained net buy­ers. The breadth of the mar­ket re­mained pos­i­tive amidst low vol­umes. On the global front, crude oil prices con­tin­ued to re­main soft on ac­count of higher pro­duc­tion. How­ever, Iran sanc­tions from 5th No­vem­ber could push crude oil prices higher. On the do­mes­tic front, the earn­ings sea­son re­mained a mixed bag. Tech­ni­cally, the pre­vail­ing pos­i­tive tech­ni­cal con­di­tions helped the mar­kets bounce back with a vengeance. The Stochas­tic, KST and RSI are all placed above their re­spec­tive av­er­ages on the daily chart. Fur­ther, the Stochas­tic is placed above its aver­age and in the over­sold

ter­ri­tory on the weekly chart. Th­ese pos­i­tive tech­ni­cal con­di­tions could lead to reg­u­lar buy­ing sup­port. The pre­vail­ing neg­a­tive tech­ni­cal con­di­tions, how­ever, still hold good. The MACD, KST and RSI are all placed be­low their re­spec­tive av­er­ages on the weekly chart. Fur­ther, the MACD is placed be­low its aver­age on the daily chart. The Stochas­tic is placed in the over­bought zone on the daily chart. More­over, the Nifty is still placed be­low its 50-day SMA, 100-day SMA and 200-day SMA. Th­ese neg­a­tive tech­ni­cal con­di­tions could lead to profit-book­ing and sell­ing pres­sure, es­pe­cially at the higher lev­els.

The +DI line has moved above the -DI line and is placed above

27, which in­di­cates that the buy­ers are gain­ing strength. The

ADX line is placed above 32. The Nifty found sup­port at the 10K level, which au­gurs well for the mar­kets sen­ti­ment. Now, it is im­por­tant for the Nifty to move and sus­tain above the re­sis­tance level of 10589 for fur­ther buy­ing sup­port to be wit­nessed and move higher to test the re­sis­tance lev­els of 10748-10808. 10400 is an im­por­tant sup­port level fol­lowed by 10200. The mar­kets will need reg­u­lar fol­low-up buy­ing sup­port at the higher lev­els for the Nifty to test 10800.

Iran sanc­tions from 5th No­vem­ber could weigh on the mar­ket sen­ti­ment go­ing for­ward. Mean­while, the mar­kets will take cues from the earn­ings sea­son, Dol­lar-Ru­pee ex­change rate, global mar­kets and crude oil prices. Tech­ni­cally, the Sen­sex faces re­sis­tance at the 35322, 36350 and 37165 lev­els and seeks sup­port at the 34937, 34344, 33723, 32972 and 32483 lev­els. The re­sis­tance lev­els for the Nifty are placed at 10589, 10748, 10808 and 10936 while its sup­port lev­els are placed at 10419, 10340, 10283, 10200, 10000, 9958, 9827 and 9735.

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