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

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