Daily Market Trend Guide -- Friday, December 04, 2015

MARKET REPORT                                                                                  December 04, 2015

The Markets wore a highly disappointing bearish undertone especially in the final hour of the trade as it ended the day with losses near the low point of the day. The Markets saw a negative opening and spent the morning session in a ranged trade while forming the day’s high at 7912.30. After spending the morning trade in a sideways trajectory, the Markets slipped further in afternoon trade. By late afternoon though, the Markets managed to recoup much of its losses and traded only with modest losses. However, it was last hour and half of the trade that did most of the undoing. The Markets saw a gradual but near parabolic paring of gains as it sharply went on to form the day’s low of 7853.30. No major recovery was seen and the Markets ended the day at 7864.15, posting a net loss of 67.20 points or 0.85% while forming a sharply lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, DECEMBER 04, 2015

Knee-jerk reaction to the lesser-than-expected stimulus from ECB would be not as sharp as the European Markets but we can certainly expect our Markets to open on a lower note and look for directions. Some amount of weakness may continue to persist for some more time but the intensity is not expected to be sharp. The volumes and participation is likely to remain lower as well.

For today, the levels of 7900 and 7945 are immediate resistance levels for the Markets. The supports are expected to come in at 7820 and 7775 levels.

The RSI—Relative Strength Index on the Daily Chart is 44.0825 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD continues to remain bullish as it trades above its signal line.

On the derivative front, the NIFTY December futures have added 30,750 shares or 0.16% in Open Interest. This figure remains nominal but we can certainly interpret that there has been no major offloading of positions in yesterday’s session.

While having a look at pattern analysis, it is largely evident that after attempting to break out of the congestion zone that the Markets formed in November, it greatly resisted to the 8000-levels which also happened to be its major pattern resistance and it also coincided with its 50-DMA. While the Markets failed to take any directional call around these levels, it lost ground failing to get any triggers. Now, the Markets are likely to enter and remain once again into that congestion zone and might drift lower lacking any directional guidance. However, during all this the volumes are expected to remain lower and there can be some technical pullbacks as well.

Going by all this, given the direction-less nature of the Markets it is best advised to avoid taking any fresh positions. Though the Markets are drifting lower, it may also see some pullbacks as well but overall is not likely to take any clear directional bias in immediate short term. It is advised to keep exposure at very modest levels while preserving liquidity and continuing to adopt a cautious outlook on the Markets.

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

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