MARKET TREND FOR THURSDAY,MARCH 02, 2017
Fuelled by stronger than expected GDP data which belied the
expected adverse effects of demonetization, the Markets saw some upsurge as the
NIFTY ended the day gaining 66.20 points or 0.75%. This was further aided by
very buoyant global equity set up. Here, at this juncture, there are some
important factors that one needs to take care of. There is no doubt that
liquidity is severely chasing the Markets but with the end of the yesterday’s
session, the NIFTY has halted precisely near the Double Top resistance of 8940-8950
zones. We had mentioned these levels in our yesterday’s note and the Markets
have halted their up-move very near to these levels. However, today, we might
see a positive opening and Markets may trade positive in the initial session
and even test 8970-9000 mark but situation might warrant deep attention towards
Close. Possibility of the Markets paring gains, if at all there are any,
towards the end may not be ruled out. It would be wise not to give a frenzied
chase to the Markets until it consolidates a bit given the slightly overbought
nature of the Markets.
For today, the levels of 8990 and 9025 will act as immediate
resistance levels for the Markets. The supports come in much lower at 8865 and
8810.
The Relative Strength Index – RSI on the Daily Chart is
70.6383 and it trades slightly overbought. The NIFTY has set a fresh 14-period
high whereas the RSI has not yet and this has resulted into a Bearish
Divergence on this oscillator. The Daily MACD still continues to remain bearish
while trading below its signal line.
On the derivative front, the NIFTY March futures have
massive 11.44 lakh shares or 5.37% in Open Interest. This indicates very strong
undercurrent in the Markets.
The pattern analysis shows that the NIFTY has ended at its
Double Top pattern resistance at Close levels. Though it still rules its
immediate highs and upward moves cannot be ruled out, these levels at Close
needs to be critically monitored. We will continue to see the up surge in the
Markets given the frenzied chase by liquidity but that will make the Markets
vulnerable to profit taking bouts from higher levels. Though we do not rule out
continued surge in the Markets, every up move will make NIFTY vulnerable to
profit taking bouts as the NIFTY seems overextended at present.
Overall, we reiterate that the undercurrent remains
extremely buoyant and we expect the NIFTY to extend its gains, at least in the
initial session. However, having said that, as the Markets once again
approaches the 9000-mark, the protection of profits at those levels will remain
immensely important. We recommend highly vigilant protection of profits at higher
levels while dips may be continued to be used for making highly selective
stocks specific purchases.
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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