Daily Market Trend Guide -- Friday, December 18, 2015

MARKET REPORT                                                                             December 18, 2015

Markets resisted precisely at the 7800 levels in the first half of the session but finally ended above it after a sharp rise mainly aided by short covering. The Markets saw a modestly positive opening as expected but resisted exactly at 7800+ levels. No sooner did the Markets touch this level it rapidly pared all of its gains. At one point, it came off more than 50-odd points from its opening gains and traded briefly in the negative territory while it formed its intraday low of 7737.55. It traded flat in the entire first half of the session. It was the second half that saw a sharp spurt. Markets saw a sharp rise and not only it moved past its opening highs  but also went on to form the day’s high of 7852.90, rising over 120-odd points from the low point of the day. It finally settled the day at 7844.35, posting a decent gain of 93.45 points or 1.21% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, DECEMBER 18, 2015

Markets might witness today a bit of consolidation after nearly 300-odd points of a pullback in last couple of sessions. We can expect the Markets to open on a modestly negative note and consolidate in the initial trade. The likely opening level would be around its important pattern resistance of 7800 that it breached on the upside. It is likely that the Markets open around those levels and see some consolidation. Behavior of the Markets vis-à-vis this level would be important to watch out for.

For today, the levels of 7875 and 7920 will act as immediate resistance levels. The supports come in at 7800 and 7740 levels.

The RSI—Relative Strength Index on the Daily Chart is 51.8876 and it has just reached its highest value in last 14-days which is bullish. Also, the RSI has set a fresh 14-period high but the NIFTY has not yet and this is Bullish Divergence. The Daily MACD has reported a positive crossover and is now bullish as it trades above its signal line.

On the derivative front, the NIFTY December series have shed over 4.50 lakh shares or 2.31% in Open Interest. This is clear indication that the sharp rise that we saw yesterday has come back on short covering. The NIFTY PCR stands unchanged at 0.82.

While coming to pattern analysis, the Markets have managed to move past yet another of its pattern resistance levels of 7800 yesterday after resisting to it in the first half of the session. Technically speaking, this should not act as a support in event of any consolidation. We have mentioned often in our previous editions of Daily Market Trend Guide that though the Markets have pullback after finding support at its 52-week lows, it has not yet confirmed the bottom. Today, we expect a modestly negative opening around the pattern support and ideally speaking, the Markets should consolidate with remaining above this critical support level of 7800, consolidate for a day or so an resume its up move. If this happens, it would amount to confirmation of bottom for a immediate short term.

As mentioned above, the behavior of the Markets vis-à-vis the level of 7800 would be important to watch out for. The Markets will have to remain above 7780-7800 zones in order to just consolidate and avoid any weakness from creeping in. Any breach below these levels will induce some short term minor consolidation in the Markets and delay confirmation of a bottom. It is advised to continue to remain modest and selective on purchases while continuing to protect profits at higher levels.

Milan Vaishnav,
Consulting Technical Analyst

Af. Member: Market Technicians Association, (MTA), USA
Af. Member: Association of Technical Market Analysts, (ATMA), INDIA
www.EquityResearch.asia
http://milan-vaishnav.blogspot.com

+91-98250-16331
milan.vaishnav@equityresearch.asia
milanvaishnav@yahoo.com

Daily Market Trend Guide -- Thursday, December 17, 2015

MARKET REPORT                                                                                December 17, 2015

Though the Markets continued to end yet another day with modest gains, caution weighed heavily ahead of Fed Interest Rate decision yesterday. The Markets saw a modestly positive opening and saw itself trading in a capped range in the early morning trade wherein it formed its intraday low of 7715.75. It saw a sharp spurt in the late morning session as it nearly doubled its gains. It moved sideways in the first half of the session while maintaining its gains in steadfast manner. It strengthened further to form the day’s high of 7776.60 by afternoon. The second half of the session saw some caution showing up in the Markets. Markets grew cautious ahead of the Federal Reserve’s decision and because of this the Markets saw itself retracing a bit from its intraday highs. It came off from the high point of the day and finally settled the day at 7750.90, posting a net gain of 50 points or 0.65% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, DECEMBER 17, 2015

The Federal Reserve, in a much expected move, raised the interest rates by 25 bps and has finally initiated the lift-off. However, the reaction to this would be limited and this would remain more or less a non-event as much of the development was already factored in. The Markets are expected to open with marginal gains and are likely to resist at its pattern resistance levels of 7800. The technical structure would dominate and we will see the Markets attempting to consolidate after the expected positive opening.

The levels of 7775 and 7800 will act as immediate resistance levels for the Markets. The supports come in at 7720 and 7670 levels.

The RSI—Relative Strength Index on the Daily Chart is 45.4183 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD continues to remain bearish as it trades below its signal line.

On the derivative front, the NIFTY December futures have shed over 7.61 lakh shares or 3.76% in Open Interest. This very clearly implies that there has been absolute short covering yesterday and the amount of caution has grown in the Markets. The NIFTY PCR stands at 0.82 as against 0.84 yesterday.

Coming to pattern analysis, as mentioned often in our previous editions of the Daily Market Trend Guide, the Markets have held on to its all important Double Bottom and 52-week low support of 7540 levels. It has managed to pullback nearly 200-odd points from there but bulk of this pullback have come on account of short covering and with lower volumes. It is also important to note that though this pullback has been witnessed, the Markets have not shown any signs of confirming a bottom formation until it consolidates, forms a higher bottom and resumes its up move. Currently it continues to face important pattern resistance once again after a expected positive opening today.

Overall, the Markets are likely to witness a rally but the rally would be less fuelled by Fed Rate hike and more dominated with technical structure of the Charts. The Markets faces a resistance at 7800 levels and it is very much likely that the Markets resists / consolidates at that level. Even some minor profit taking bout cannot be ruled out. It is advised to continue to adopt stock specific approach. Sectoral out performance would be seen. Very selective purchases can be made while protecting profits at higher levels.

Milan Vaishnav,
Consulting Technical Analyst

Af. Member: Market Technicians Association, (MTA), USA
Af. Member: Association of Technical Market Analysts, (ATMA), INDIA
www.EquityResearch.asia
http://milan-vaishnav.blogspot.com

+91-98250-16331
milan.vaishnav@equityresearch.asia
milanvaishnav@yahoo.com