NIKKEI 225 FALLS BELOW MA5, CAUTION OVER CHINESE DEMAND DAMPENS SENTIMENT

Nikkei 225 futures are currently trading at 20685-higher by 0.92% as compared to the previous closing. The contract, however, closed in the negative territory in the last trading session.

In the Cash Markets, the Nikkei 225 inched up 0.076% to close at 20,664.64 on Tuesday. The benchmark was in negative territory for much of the day after warnings from U.S. industry bellwethers Caterpillar and Nvidia raised concerns over weakening Chinese demand. The broad-market index hit its weakest level (20,406.22) since 17th January earlier in the session.

The broader Topix edged up 0.10% to close at 1,557.09 on Tuesday.

The Nikkei 225 inched up on Tuesday led by gains in defensive stocks such as utilities, food, and railway operators. Tokyo Electric Power Co climbed 3.7% and Central Japan Railway rose 1.3% on Tuesday.

Of the Tokyo Stock Exchange’s 33 sub-indexes, machinery and electric machinery sectors were some of the worst performers, falling 1.6% and 1.2%, respectively.

Hitachi Construction Machinery and Komatsu Ltd both shed 4.3% and 4.5% respectively following Caterpillar’s results.

Chip-related shares also lost ground after Nvidia’s estimate cut. Tokyo Electron fell 2.4%, Advantest Corp dropped 4.6% and Screen Holdings plunged 7.6% on Tuesday.

Silicon products maker Sumco Corp dived 5.3% and Shin-Etsu Chemical fell 6%.

Other top losers in the index include Trend Micro (fell 9.03%), FANUC (fell 2.8%), and Okuma (fell 2.4%) on Tuesday.

On the economic front, Retail Sales for December are scheduled to be released on early Wednesday. Sales are expected to rise 0.9% on a YoY basis with Sales rose by 1.4% YoY in the previous month.

On the technical front, the RSI is currently at 53.5% and suggests that the market can move in the upward direction. The current price is below the MA5. The %K has crossed %D from above to the downside at around 80% and suggests that the market can move in the downward direction.

Overall Bias is negative and Short-term trades can be initiated with below mentioned Stop Loss and Profit targets.

 

Trade Suggestion-Stop Sell At 20670 Take Profit At 20550 Stop Loss At 20730

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