MARKET TREND FOR FRIDAY, DECEMBER 30, 2016
Very much on expected line, the NIFTY resumed its up move
after a day’s break and ended the day with decent gains of 68.75 points or
0.86%. We had mentioned in our previous edition that NIFTY not correcting at
Close levels even after a gain of 124-points in the previous session is a sign
of inherent strength. NIFTY continues to display buoyancy and today we expect
as stable and positive start to the Markets and the NIFTY is likely to continue
with its gains at least in the initial trade. In the given circumstance, the
logical targets for the NIFTY can be its 200-DMA which stands at 8258.
For today, the levels of 8165 and 8220 will act as immediate
resistance levels for the Markets. The supports come in at 8065 and 8020
levels.
The RSI—Relative Strength Index on the Daily Chart is
48.2825 and it continues to remain neutral as it shows no bullish or bearish
divergence or any failure swings. The Daily MACD, as we had expected in our
previous edition has reported a positive crossover and it is now bullish while trading
above its signal line. On Candles, an engulfing bullish line has
occurred and given the structure of the Chart, it is very much likely that it
will fuel the up move in the next session. However, this needs confirmation.
On the derivative front, the NIFTY January series has added
over 33.98 lakh shares or 26.66% in Open Interest resulting into net addition
of Open Interest over December futures.
Coming to pattern analysis, two things stands established.
First, the levels of 7900-7920 have continued to hold as immediate short term
support. Secondly, this level has also seen a important pattern formation of a
Double Bottom and this is likely to continue to lend support to the Markets in
the immediate short term. However, it is important to note that the bottoms
have been formed but the reversal is yet to be confirmed. Confirmation will
occur once the NIFTY moves past 200-DMA and sustains above that.
Overall, the buoyancy is likely to continue. Though some
intermittent profit taking bouts cannot be ruled out, at no point the Charts
warrants creation of fresh short exposures. Dips should be continued to be
utilized to make select purchases. Sector rotation has once again become
evident and IT and FMCT and select energy and Midcaps are likely to remain in focus.
Overall, we continue to have positive outlook on the Markets for today.
Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member: Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
+91-98250-16331
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