Daily Market Trend Guide -- Monday, December 14, 2015

MARKET REPORT                                                                                         December 14, 2015

The cheers of Thursday remained short lived as the Markets disappointed once again on Friday as it ended yet another day with losses. The levels of 7680 held out as resistance perfectly on expected lines. The Markets saw a modestly positive opening and formed its intraday high of 7703.05 in the very early minutes of the day. The Markets traded in a capped range for a while but ultimately slipped below its critical levels of 7680. Though the Markets managed to trade below this level with limited losses in the morning trade, the damage intensified after that. For the most part of the session after that, the Markets kept making gradual lows. At one point, it slipped to form a day’s low of 7575.30, very near to its 52-week lows. However, in the final hour of the trade, some modest recovery was seen and the Markets finally settled the day at 7610.45, posting a net loss of 72.85 points or 0.95% while making a higher top but lower bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, DECEMBER 14, 2015

The technical structures on the Daily Charts remain weak and following global weakness, we are once again likely to see a negative opening. The opening would be critically crucial because the likely opening levels will see the Markets testing its important pattern support and also the 52-week low levels. The nearly oversold nature of the Markets may attempt to lend some support but the undertone remains bearish ahead of the Fed Rate hike. The NOV WPI data and the YOY inflation data are set to come in but are expected to offer little help to the otherwise weak technicals.

For the levels of 7635 and 7660 are immediate resistance levels for the Markets today. The supports come in at 7540 and 7480 levels.

The RSI—Relative Strength Index on the Daily Chart is 32.8756 and it is trading just above its oversold levels. Though it does not show any failure swing, the RSI is yet to make fresh 14-day low whreas the NIFTY has formed a fresh 14-day low and this is Bullish Divergence. The Daily MACD remains bearish as it trades below its signal line. On the Weekly Charts, the Weekly RSI stands at 37.9094 and shows a bullish divergence. However, this may just help Markets show some resilience in near term. The Weekly MACD remains bearish as it continues to trade below its signal line.

On the derivative front, the NIFTY December futures have added 5.79 lakh shares or 3.07% in Open Interest. This is clear indication of fresh short to have been added in the system.

While having a look at pattern analysis, the Markets are slated for lower opening. However, this opening will see the Markets testing its pattern support and also the 52-week lows that it had formed previously. This is important larger double bottom support. Also the expected lower opening might see the Markets getting nearly oversold as well. So these factors combined may attempt to lend support to the Markets in the immediate short term. However, the inherent structure remains bearish and the upsides and pullbacks, if any, shall remain thoroughly limited until a clear indication of bottom formations is seen. It is important to see that any serious breach below the levels of 7540 will see the Markets getting weaker in the immediate short term.

Over all, the current undertone of the Markets continues to remain bearish. Today’s expected lower opening may make the Markets nearly oversold and there are also chances that we continue to see some improvement as the session progresses. However, in any case, with no signs of any bottoms being formed, the undertone remains bearish. This technical structure may keep the Market volatile and any breach below 7540 will take the Markets lower. It is advised to continue to refrain from taking any major positions and adopt heavily 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

+91-98250-16331
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