MARKET TREND FOR FRIDAY, SEPTEMBER 09, 2016
The Markets consolidated with positive bias yesterday as
analyzed in our yesterday’s edition and while it ended at 18-month high at
Close, the entire IT pack suffered on back of TCS issuing a possible loss of
momentum in the BFSI sector. This resulted into opening gap-down losses in all
IT stocks which remained throughout the session. Speaking purely on technical terms, we will
see the Markets still continue to consolidate while the IT pack may see some technical rebound either
today or in coming sessions.
Today, the levels of 8968 and 9025 will continue to act as
immediate resistance levels and the supports are expected to come in at 8910
and 8865 levels.
The RSI—Relative Strength Index on the Daily Chart stands at
71.5276 and it once again trades in “overbought”
territory. Though it does not show any failure swing, the NIFTY has reported
its fresh 14-period high whereas RSI has not. This is Bearish Divergence. The
MACD on the Daily Chart still continues to trade above its signal line and is
currently bullish.
On the derivative front, the NIFTY September futures have
added over 3.43 lakh shares or 1.01% in Open Interest.
Coming to pattern analysis, after forming a high at 8968,
NIFTY has been once gain consolidating in a narrow range, very much on expected
lines. Such consolidation will continue in coming days as well as the Markets
are “overbought” and the lead indicators show bearish divergence indicating
temporary fatigue. However, such corrective activity will remain in the form of
range bound consolidation and limited declines. On the lower side, the levels
of 8720-8750 will continue to led solid support in case of any downsides.
Overall, though the lead indicators continue to remain
overbought and show some fatigue, the internal strength in the Markets remain
intact and no major downsides are likely. As we had mentioned in our previous
editions, sectors like Pharma, Auto and select MidCap have shown exemplary out
performance and will continue to do so. Corrective activities will not see any
major downsides but intermittent selling bouts and volatility cannot be ruled
out. IT stocks may see some technical rebound as the CNXIT stands at 25-month
low but displays Bullish Divergence on the Daily Charts. Overall, while
avoiding shorts, positive caution is advised for today.
Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg.
No. INH000003341)
Member: Market
Technicians Association, (MTA), USA
Member: Association of Technical Market Analysts,
(ATMA), INDIA
http://milan-vaishnav.blogspot.com
+91-98250-16331
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