Thursday, December 15, 2016

Daily Market Trend Guide -- Thursday, December 15, 2016

MARKET TREND FOR THURSDAY, DECEMBER 15, 2016
The Indian Equity Markets had a volatile session especially the second half wherein the NIFTY oscillated in a capped range and ended the day with a modest cut. Today, while we open, we will see the NIFTY reaction to the FOMC Interest Rate decision. It becomes important to note that a 25bps rate hike has been factored in by the Markets. As evident from the Daily Charts, the NIFTY has been successfully tracking the rising trend line drawn from the recent lows of 7916 and given the rising nature of this trend line, the zones of 8140-8160 will remain critical to watch out for. Any opening below these levels will cause the NIFTY to resist in this zone. It is also important to note that the US and the European Markets are trading quite “overbought” given the fact that the rate hike stands factored in. Even if these Markets correct a bit, we may see divergence of performance on our bourses as the domestic equity markets have remained gross under-performer in the recent past as compared to global peers.

For today, the levels of 8212 and 8275 will act as immediate resistance levels while the supports are expected to come in at 8140 and 8065 levels.

The RSI—Relative Strength Index on the Daily Chart is 46.9832 and it continues to remain neutral and it does not show any bullish or bearish divergence or any failure swings. The Daily MACD is bullish and it continues to trade above its signal line. An Engulfing Bearish Pattern has occurred on the Candles. This signifies a potentially bearish day ahead but this requires confirmation on the next trading day.

On the derivative front, the NIFTY December futures have shed over 3.79 lakh shares or 2.24% in Open Interest. We can fairly observe that some positions have been pared while going ahead for the session ahead of FOMC decision.

While having a look at pattern analysis, we can fairly observe, as evident from the Daily Charts that the NIFTY has been tracking the rising trend line drawn from 7916 lows that it formed recently. It is important to note that the NIFTY has not successfully managed to stay above 200-DMA and secondly, the pullback has not been strong and convincing enough. However, as of today, the NIFTY has not breached the rising trend line drawn from recent lows and therefore, the zones of 8140-8160 remain critical levels to watch out for.

Overall, it is once again evident that any opening or drop below the 8140-8160 levels wills some temporary weakness creeping into the Markets. In the same breath, given the gross under-performance of the Indian Markets vis-à-vis its global peers and the existence of shorts in the system might lend support at lower levels. We recommend not to take any major directional positions so long as NIFTY trades below 200-DMA. Post 200-DMA, select purchases may be continued as IT and other select stocks are likely to predominantly out-perform in coming days.

Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Association of Technical Market Analysts, (ATMA), INDIA

http://milan-vaishnav.blogspot.com


+91-98250-16331 

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.