MARKET TREND FOR THURSDAY, DECEMBER 08, 2016
The NIFTY struggled below its 200-DMA in the first half of
the session and while it attempted to move past it, RBI Monetary Policy sprung
a surprise as it kept all the key rates unchanged when 50 bps rate cut was
expected and 25 bps rate cut was already discounted for. RBI kept the rates
unchanged, rolled back incremental CRR and revised its FY17 GVA estimate to
7.1%. The NIFTY ended with modest losses though it came off its lows. Today, we
will continue to see the NIFTY attempting to move past the 200-DMA and this
level will continue to remain the key level to watch for. Yesterday’s
volatility has not caused any structural damage and therefore we expect the
Markets to continue to consolidate with a positive bias while its behavior
vis-à-vis the level of 200-DMA will continue to remain critically important.
For today, the levels of 8185 and 8250 will remain immediate
resistance levels while the supports are expected to come in at 8075 and 8030
levels.
The RSI—Relative Strength Index on the Daily Chart is 41.1818
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. No significant formation on Candles has been observed.
On the derivative front, the NIFTY December futures have
added over 3.32 lakh shares or 2.15% in Open Interest. Fresh addition of short
positions was seen as well.
If we have look at pattern analysis, post formation of 7929
lows at Close levels, the NIFTY has been consolidating and has been attempting
to form a base at current levels. While doing so, it had moved past the 200-DMA
once but once again it is trading below its 200-DMA which is 8185 today. In the
given structure of the Charts, the NIFTY has been consolidating in a broad range
and continued to show positive bias. For it to confirm the base it will have to
move past 200-DMA and therefore, the behavior of the NIFTY vis-à-vis the levels
of 200-DMA remains important to watch for.
Overall, we have been witnessing small signs of accumulation
at current levels and this is causing the NIFTY to consolidate. Upon
examination of the overall structure of the technical Charts, and readings when
considered along with evidences from the lead indicators and the F&O data,
the NIFTY is currently exhibiting a positive bias. It is likely that we
continue to see volatility and intermittent bouts but overall bias and inherent
strength looks evident. With sector specific out-performance likely to
continue, accumulation of key / quality stocks is advised in moderate
quantities.
Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg.
No. INH000003341)
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Association of Technical Market Analysts, (ATMA), INDIA
http://milan-vaishnav.blogspot.com
+91-98250-16331
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