Nifty Recovers on Global cues, Short covering…

By Dominic Rebello

Review of the Previous day: The Nifty rose substantially on Wednesday
(November 04, 2009) a net 146.90 points (3.22%) and closed at 4710
point level. The market opened up and continued so throughout the day
until closing near the day high. The rise yesterday was fuelled by
positive global cues, short covering and Institutional buying.
Sentiment was extremely bullish and amongst the 50 Nifty stocks, 45
were gainers, while just 5 were losers. All the sectoral indices
closed in the green. Heavy buying was witnessed in Realty, Metal, IT,
Oil & Gas, Bank, Auto, Healthcare, FMCG and Power stocks.

Technical Analysis:

Volume: (Qty shares) decreased 5.11%. This change is small and
indicates a moderate participation by investors.

Market Breadth: Overall Market Breadth on the NSE was positive.
Amongst all the traded stocks, 967 were gainers, 310 were losers and
25 remained unchanged.

Slow Stochastic Indicator: The Slow Stochastic Oscillator is in the
over-sold zone. The Slow K line in the Stochastic Oscillator has risen
above the slow D line (positive buy signal).

RSI Indicator: The RSI rose and crossed above the 30 level and is now
rising (positive if it continues).

 MACD Indicator: The MACD is below zero and is declining (negative if
it continues). It is below its 9-day Average (negative).

 ADX Indicator & DI Lines: The +DI line is below the –DI line but both
lines are converging (positive if it continues). The ADX is rising
while the Market Index is rising, which indicates that the present up
trend is increasing in strength.

Moving Averages (Trend Indicators)

The index:

Is below its 5-day average (at 4712) Negative.

Is below its 15-day average (at 4937) Negative.

Is below its 25-day average (at 4968) Negative.

Is above its 200-day average (at 3952) Positive.

Overall Market Strength/Weakness: The indicators and oscillators
discussed here are indicating a neutral market but with a positive
bias.

Support Levels:For short-term traders the immediate main support is at
4394 marked as S1 (blue line below the Index).

Resistance Levels: The immediate main resistance is at 5193 marked as
R1 (red line above the Index).The next resistance is at 5580 marked as
R2 (red line above the Index).

Pivot Point Analysis:For intra-day traders the support and resistance
levels are calculated according to the pivot point theory and are:

Pivot point = 4665 (This is the level where the trend is likely to
change during intra-day).

Support (1) = 4611.

Support (2) = 4512.

Resistance (1) = 4764.

Resistance (2) = 4817.

(For  support and resistance levels all F&O stocks refer to the
Afternoon
newspaper) .

Outlook for Today: On Japanese candlestick patterns the index after
having formed a long black body candle has formed a long white body
candle. In fact, yesterday's candle is almost like a white body
Marubozu candle.  (A White Marubozu forms when the open equals the low
and the close equals the high). Further, the velocity parameters,
which were negatively trended, have now turned neutral. Both these
indicate a positive bias.

However, the index is below its 5, 15 and 25 day’s moving averages and
all the three averages are negatively trended and also declining. This
is negative. As such these are mixed signals.
Investors are advised to adopt a wait and watch policy, until a clear
reversal signal is visible.

Work with strict stop losses on all positions.