Earn­ings and global cues will in­flu­ence sen­ti­ment

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

The do­mes­tic mar­kets started on a pos­i­tive note last week. The

Nifty crossed 10900 touch­ing an in­tra-day high of 10923 but it failed to test the re­sis­tance level of 10942. Weak global mar­ket cues due to China’s poor PMI num­bers and lower monthly GST col­lec­tions in In­dia spooked the mar­ket. The mar­kets failed to of­fer any re­silience on the back of sus­tained bouts of sell­ing pres­sure and profit-book­ing. Buy­ing sup­port re­mained dis­mal. The breadth of the mar­ket re­mained neu­tral amidst high vol­umes. The FIIs turned net sell­ers in the cash seg­ment but re­mained net buy­ers in the de­riv­a­tives seg­ment. The DIIs, how­ever, turned net buy­ers once again and were seen sup­port­ing the mar­kets at the lower lev­els.

On the do­mes­tic front, the GST col­lec­tion re­mained tepid and it looks dif­fi­cult for GST rev­enues to in­crease im­me­di­ately due to the re­cent rate cuts. Monthly auto num­bers re­leased also missed es­ti­mates. Crude oil prices re­mained sub­dued amidst con­cerns about the global econ­omy and high in­ven­tory. The US mar­kets, too, re­mained weak af­ter Ap­ple Inc is­sued a warn­ing that it will badly miss its quar­terly sales fore­cast on the back of weak­en­ing growth and trade ten­sions in China. Peo­ples Bank of China re­duced its bank re­serve ra­tio by 100 bps to im­prove liq­uid­ity con­di­tions and boost de­mand af­ter the dis­as­ter PMI num­bers. More cen­tral banks could fol­low suit to ar­rest the fall in eco­nomic growth. Tech­ni­cally, the pre­vail­ing neg­a­tive tech­ni­cal con­di­tions weighed on the mar­ket sen­ti­ment. The Stochas­tic, KST and RSI are all placed be­low their re­spec­tive av­er­ages on the daily and weekly charts. The MACD is placed be­low it av­er­age on the daily chart. Fur­ther, the Nifty is placed be­low its 100-day SMA and 200-day SMA. More­over, the Nifty’s 50-day SMA is also placed be­low its 100-day SMA and 200-day SMA, sig­nal­ing a ‘Death Cross’ break­down. All these neg­a­tive tech­ni­cal con­di­tions could lead to profit-book­ing and sell­ing pres­sure, es­pe­cially at the higher lev­els.

The pre­vail­ing pos­i­tive tech­ni­cal con­di­tions, how­ever, still hold good. The Stochas­tic is near the over­sold ter­ri­tory on the daily chart. Fur­ther, the Nifty is still placed above its 50-day SMA. These pos­i­tive tech­ni­cal con­di­tions could lead to short-cov­er­ing

Now fol­low us on In­sta­gram, Face­book & Twit­ter at mon­ey­times_1991 on a daily ba­sis to get a view of the stock mar­ket and the hap­pen­ings which many may not be aware of.

and buy­ing sup­port at the lower lev­els.

The -DI line is placed above the +DI line and above 33, which in­di­cates that the sell­ers are gain­ing strength. The ADX line is still lan­guish­ing around 14, which in­di­cates that the mar­kets lack a sec­u­lar trend and the cur­rent trend has no strength. The Nifty has failed to sus­tain above the 10756 level, which does not au­gur well for the mar­kets. The Nifty needs to sus­tain above 10756 for sell­ing pres­sure to ease and to rise fur­ther to test the 10843 level. If the Nifty sus­tains be­low 10756, then it could slip fur­ther to test the sup­port range of 10625-10589.

The mar­ket sen­ti­ment re­mains ten­ta­tive and ner­vous ahead of the forth­com­ing earn­ings sea­son. Pos­i­tive news flow and reg­u­lar buy­ing sup­port at the higher lev­els is needed for the mar­kets to move higher. Stock-spe­cific ac­tion is likely to con­tinue. Mean­while, the mar­kets will take cues from the al­lo­ca­tion by FIIs, earn­ings sea­son, Dol­lar-Ru­pee ex­change rate, global mar­kets and crude oil prices. Tech­ni­cally, the Sen­sex faces re­sis­tance at the 36350, 36602, 37165, 37490 and 38125 lev­els and seeks sup­port at the 35606, 35400, 35187, 34748, 34344, 33723 and 33349 lev­els. The re­sis­tance lev­els for the Nifty are placed at 10756, 10843, 10942, 11008, 11146 and 11350 while its sup­port lev­els are placed at 10710, 10625, 10589 and 10534.

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