DAILY MARKET TREND GUIDE December 21, 2011
The Markets traded in line with the analysis carried out yesterday for the entire session, except that it suddenly fizzled out in the last 45 minutes of the trade to end yet another day of losses as it ended the day at 4544.20 down by 68.90 points or 1.49%. The Markets recovered some 50-odd points from its day’s low to trade flat but pared some 70-odd points from that levels to end the day with losses. In our yesterday’s edition, we had mentioned that given the technical indicators, the levels of 4555 would act as immediate support. That support held good until end of the session where it was temporarily broken. In the process, the Markets have formed a higher top and lower bottom as evident from the below chart. Thus, in the last nine sessions, NIFTY has shed 518.40 points or 10.70%.
Today, we can expect a long overdue pullback in the Markets. The European Markets have ended strong followed by strong consumer sentiment index in Germany and successful auction of Spanish bonds. The US too has rallied overnight and the Asian Markets are trading strong.
The Indian Markets too, which are nearly OVERSOLD and one of the worst performer among its peers is expected to give a gap up opening. It would be extremely important for the Markets to remain in positive rising trajectory post opening in order to capitalize on the positive opening. The levels of 4675 shall act as immediate resistance, the support (indicated with red line on the charts) which it broke. On the lower side, theoretically speaking, would be the levels of 4555.
The NIFTY added Open Interest yesterday, the OVERSOLD stock continued to get further OVERSOLD while adding Open Interest so the pullback that we would see would be imminent anyway, which would be supported by the buoyant global markets.
We refer our Monday’s edition of Daily Market Trend Guide wherein we had mentioned the Weekly Chart of the NIFTY and had mentioned that baring weakness for a day or two, the overall Week should not be that bad for the Markets and with today’s opening, we would neutralize this week losses, leaving the rest to the Markets to sustain. Also, as mentioned yesterday, even though the Markets continue to move further down, it has a potential for a sharp pullback, to the tune of 150-200 points, still remaining in overall downtrend and overall falling channel.
Thus, watching the intraday trajectory for the Markets which would be critically important, positive outlook is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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