Daily Market Trend Guide -- Wednesday, December 16, 2015

MARKET REPORT                                                                          December 16, 2015

After spending the first half of the session on a absolutely flat note, the Markets had a reluctant up move ahead of much awaited Fed move today as the Markets finally ended with modest gains. The Markets saw a very quiet opening and after opening on a flat note, it dipped into the red to form a day’s low of 7625.10 in the early morning trade. The Markets stayed subdued and remained in a extremely capped range with limited losses in the first half of the session. It was the second half wherein the Markets saw some strength coming it. It crawled back into the positive and spent the rest of the session forming gradual highs. The Markets remained in upward rising trajectory until the end and formed its intraday high of 7705 in the last hour of the trade. It finally settled the day at 7700.90, posting a modest gain of 50.85 points or 0.66% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, DECEMBER 16, 2015

Today’s Market session would be important as it braces itself with the possibility of the Fed Rate hike later today and also to the fact that such hike / lift-off of 0.25 bps stands largely discounted in present valuations. Today’s opening is likely to be decently positive and the Markets are expected to continue with its pullback. Though no bottoms have been confirmed as yet, the level of 7540 has stood out as the valid support for the immediate short term.

For today, the levels of 7740 and 7775 will act as immediate resistance levels for the Markets. The supports come in at 7625 and 7590 levels.

The RSI—Relative Strength Index on the Daily Chart is 41.0456 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stands bearish as it trades below its signal line.

On the derivative front, the NIFTY December futures have added over 4.34 lakh shares or 2.19% in Open Interest. The NIFTY PCR stands at 0.84 as against 0.81 yesterday.

While having a look at pattern analysis, it is very much evident that the Markets have attempted to find bottoms once again at its all important pattern support of 7540 level. Having said this, it is important to note that though the Markets have witnessed a good amount of bounce back / pull back from that level, it is yet to confirm any bottom. So, in a way, in spite of the pull back, the confirmation for a bottom formation still stands awaited. However, given the expected decent opening, the Markets are likely to continue with its pullback but it may encounter resistance once again some 50-70-odd points from here. Further, most importantly, the reaction to the Markets post Fed Rate hike decision would be of utmost importance.

All and all, the Markets have discounted the Fed Rate hike of 0.25 bps. It is likely to see a relief rally if the Fed hikes the rate on these expected lines. However, it will continue with such pullback only to meet is another pattern resistance. However, in an unlikely event of Fed holding back, it would lead to negative reaction from the Markets. Given the uncertainty, it is advised to strictly refrain from creating shorts as possibilities of rate hike are more and also keep the purchases very limited and moderate and continue to protect existing profits vigilantly 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
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