Technical View: Current stock market scenario not good for intraday traders

By: | Published: August 18, 2016 4:19 PM

Benchmark indices BSE Sensex and NSE NIfty opened with a gap up on Thursday and continued to hold in the positive territory through most of the session, on a intraday basis markets over the last three days have been extremely volatile with large contradicting intraday moves in either direction.

Technical View: Current stock market scenario not good for intraday tradersBenchmark indices BSE Sensex and NSE Nifty opened with a gap up on Thursday and continued to hold in the positive territory through most of the session, on a intraday basis markets over the last three days have been extremely volatile with large contradicting intraday moves in either direction.

Benchmark indices BSE Sensex and NSE Nifty opened with a gap up on Thursday and continued to hold in the positive territory through most of the session, on a intraday basis markets over the last three days have been extremely volatile with large contradicting intraday moves in either direction. This current situation cannot be good for intraday traders and we would advocate a wait and watch approach until markets again begin to trend in either direction.

IT sector yet again continues to languish with news of dwindling order books and lower than expected results adding significant pressure on the industry. Margins of Indian IT companies remain under significant pressure. Cement companies outperformed in trade on Thursday, as did the banking sector which has continue to rally for some time now.

We continue to see considerable call buildup around the 8,700 and 8,800 levels; this suggests that smart money may be betting on a top around this level in the near future, PCR ratio is around the 1.02 levels which could also mean overall retail outlook is still positive and most retail participant expect the markets to move up from this juncture.

Technically the markets remain in an overall uptrend with the short term rally facing considerable resistance around the 8,700-8800 levels, wave theory indicates that the current market trend maybe in the third which has a higher bottom of 8,600 levels on daily charts, a break above the 8,750 levels could take the markets to the 9,000 levels.

We continue to hold a cautious outlook and will not be initiating fresh positions at this juncture.

(The author is co-founder and director, Zerodha)

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