MARKET TREND FOR FRIDAY, MARCH 03, 2017
Indian Equity Markets did everything that it could do in
yesterday’s session. Following a strong global equity setup, the benchmark
NIFTY50 opened higher and advanced towards 9000-mark while forming 8992.50 as
its intraday high. However, as we had mentioned categorically in our Thursday’s
note, NIFTY witnessed a very volatile and sharp corrective action and lost over
100-odd points from the high point of the day before ending with net loss of
46.05 points or 0.51%. As it was very much expected, the NIFTY has confirmed
the Double Top resistance zones of 8930-8950 levels and for the immediate short
term, it has marked these levels as its intermediate top. Today, we expect a
subdued start to the Markets and we might continue to see NIFTY consolidation
in capped range with downward bias. However, the buy-on-dips structure of the
Markets has not been altered.
For today, the levels of 8940 and 8990 shall act as
immediate resistance levels. Supports will come in at 8835 and 8780 levels.
The Relative Strength Index – RSI on the Daily Charts is
64.6622 and it has just moved below from a topping formation. Apart from this,
it remains neutral showing no bullish or bearish divergence or any failure
swings. The Daily MACD stays bearish as it trades below its signal line. On Candles, a Bearish Engulfing line
has occurred. If read in the present context, this has occurred after a
significant up move and therefore, it has marked an intermediate top. However,
this requires confirmation but the present candle is long enough to at least
halt the present up move.
The NIFTY March futures have shed over 3.36 lakh shares or 1.50%
in Open Interest. This shows some minor profit taking from higher levels but
this figures is not large enough to signal any notable shift in the sentiment
of the market participants.
While having a look at pattern analysis, it can be clearly
be concluded that NIFTY has, as of now, confirmed the Double Top resistance
zone of 8930-8950 and has marked these levels as an intermediate top. For a
sustainable up move to occur, NIFTY will have to move past these levels. Until
this happens, we will continue to see the NIFTY trapped in corrective
activities and range bound consolidation.
All and all, while a subdued activity is expected in the
initial trade, we advice to refrain from attempting to short the Markets as
corrective activities tend to remain shallow in a strong market. However, with
an intermediate top being marked, aggressive exposures should be avoided and
cash levels should be kept higher than normal. Dips may be continued to be
utilized to make selective purchases but sector rotation too needs to be
closely monitored. While keeping overall exposures moderate, cautious view on
the Markets is advised for today.
Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
+91-98250-16331
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