MARKET TREND FOR THURSDAY, NOVEMBER 17, 2016
The session turned out very much on analyzed lines
yesterday. The NIFTY did attempted hard to find a base at current levels but at
the same time remained highly volatile as it pared all of its opening gains to
end the day on a flat note while still clinging on to its 200-DMA. Today’s our
analysis continue to remain once again on similar lines. The NIFTY remains oversold;
remains within the filter of 200-DMA, the NIFTY PCR remains well below 0.80 and
all this indicate all possibilities of the NIFTY finding a bottom near current
levels. However, domestic factors continue to weigh heavy and NIFTY is not out
of the woods completely and still remains vulnerable to selling pressures.
Today, the levels of
8165 and 8225 will act as immediate resistance levels for today while the
supports will exist at 8075 and 8005 levels.
The RSI—Relative Strength Index on the Daily Chart is
27.6941 and it remains neutral as it shows no bullish or bearish divergence or
any failure swings. The Daily MACD stays bearish as it continues to trade below
its signal line.
On the derivative front, the NIFTY November futures have
shed over 6.38 lakh shares or 3.27% in Open Interest. The coming off from
opening highs with reduction in OI indicates some inherent weakness in the
NIFTY.
Coming to pattern analysis, the current levels of NIFTY
offer multiple supports. First, it trades within the filter of its 200-DMA and
remains “oversold”. Further to this, the NIFTY PCR which is well below 0.80
indicates oversold status. On the Weekly Charts, it trades in between 50-WMA
and 100-WMA and 8070 is one of the major pattern supports on the Weekly Charts.
On the other hand, the NIFTY will continue to witness overweighing of domestic
issues of demonetization, its resultant effect of consumption over next
quarter, etc. It is important to note
that the US10-YR Bonds may have bottomed out as indicated by technical indicators
and resultantly, we will see Yields halting its up move. This may help equities
to stabilize in the immediate short term.
All and all, as mentioned in our yesterday’s edition, a
technical pullback is imminent given the oversold levels of the NIFTY. However,
in the same breath, it is important to note that the NIFTY is not yet
completely out of the woods. It is strongly advised to refrain from creating
any fresh short positions. Dips may be utilized to make selective purchases but
only when directional bias gets clearer and some signs of bottom formation are
seen. Until that happens, cash preservation with cautiously positive outlook on
the Markets is advised.
Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg.
No. INH000003341)
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Association of Technical Market Analysts, (ATMA), INDIA
http://milan-vaishnav.blogspot.com
+91-98250-16331
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