Review of the Previous day: The Nifty rose moderately on Thursday (February 02, 2012) a net 34.20 points (0.65%) and closed at the 5269 point level. The market opened up with a gap at the 5272 points level. It then rose further and registered the day’s high at the 5289 points level at 10.20 a.m. It then turned into a range bound movement until 11.00 a.m. It then declined sharply into the red and registered the day’s low at the 5225 points level at 11.12 a.m. It then rose sharply into the green and turned into a range bound movement until closing at the day. The index moved in a range of 64 points and closed above the psychologically important 5250 points level. Sentiment was bullish and amongst the 50 Nifty stocks, 32 were gainers, while 18 stocks closed in the red. Buying was witnessed in technology, IT, metal, capital goods, realty, power, banking and oil & gas stocks, while some selling was witnessed in healthcare, consumer durables and FMCG stocks.

Technical Analysis:

Volume (Qty shares) increased 10.16%. This change is moderate but indicates a wide participation by investors

Market Breadth: Overall Market Breadth on the NSE was positive. Amongst all the traded stocks, 797 were gainers, 654 were losers and 54 remained unchanged.

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

RSI Indicator: The RSI is above the 60 level and is now rising (positive if it continues).

MACD Indicator: The MACD is above zero and is rising (positive if it continues). It is above its 9-day Average (positive).

ADX Indicator & DI Lines: The +DI line is above the –DI line and both lines are diverging (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 above its 5-day average (at 5199) Positive.

Is above its 15-day average (at 5059) Positive

Is above its 25-day average (at 4934) Positive

Is above its 200-day average (at 5192) Positive.

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

Support Levels: For short-term traders the immediate main support is at 4700 marked as S1.
The next support is at 4560 marked as S2.

Resistance Levels: The immediate main resistance is at 5240 marked as R1 was crossed above yesterday.
The next resistance is at 5360 marked as R2.

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

Pivot point = 5262 (This is the level where the trend is likely to change during intra-day).
Support (1) = 5234.
Support (2) = 5198.
Resistance (1) = 5298.
Resistance (2) = 5325.

(For support and resistance levels all F&O stocks refer to the Afternoon
Newspaper or Click here)

Outlook for Today: On Japanese candlestick patterns the index after having formed two consecutive white body candles has formed a doji pattern. This indicates indecisiveness amongst investors. The next candle formation will confirm whether the bias is towards the buy or sell side of the market.
However, the index is above the 5, 15, 25 and 200 day’s moving averages. Further the 5 day’s moving average has crossed above the 200 day’s moving average on higher volumes. Moreover, the velocity parameters continue to remain positively trended. All these indicate a positive bias and the possibility of a further up move unfolding. Investors are advised to hold long positions.  

Work with strict stop losses on all positions.