MARKET TREND FOR THURSDAY, DECEMBER 15, 2016
The Indian Equity Markets had a volatile session especially
the second half wherein the NIFTY oscillated in a capped range and ended the
day with a modest cut. Today, while we open, we will see the NIFTY reaction to
the FOMC Interest Rate decision. It becomes important to note that a 25bps rate
hike has been factored in by the Markets. As evident from the Daily Charts, the
NIFTY has been successfully tracking the rising trend line drawn from the
recent lows of 7916 and given the rising nature of this trend line, the zones
of 8140-8160 will remain critical to watch out for. Any opening below these
levels will cause the NIFTY to resist in this zone. It is also important to
note that the US and the European Markets are trading quite “overbought” given
the fact that the rate hike stands factored in. Even if these Markets correct a
bit, we may see divergence of performance on our bourses as the domestic equity
markets have remained gross under-performer in the recent past as compared to
global peers.
For today, the levels of 8212 and 8275 will act as immediate
resistance levels while the supports are expected to come in at 8140 and 8065
levels.
The RSI—Relative Strength Index on the Daily Chart is
46.9832 and it continues to remain neutral and it does not show any bullish or
bearish divergence or any failure swings. The Daily MACD is bullish and it
continues to trade above its signal line. An Engulfing Bearish Pattern
has occurred on the Candles. This signifies a potentially bearish day ahead but
this requires confirmation on the next trading day.
On the derivative front, the NIFTY December futures have
shed over 3.79 lakh shares or 2.24% in Open Interest. We can fairly observe
that some positions have been pared while going ahead for the session ahead of
FOMC decision.
While having a look at pattern analysis, we can fairly
observe, as evident from the Daily Charts that the NIFTY has been tracking the
rising trend line drawn from 7916 lows that it formed recently. It is important
to note that the NIFTY has not successfully managed to stay above 200-DMA and
secondly, the pullback has not been strong and convincing enough. However, as
of today, the NIFTY has not breached the rising trend line drawn from recent
lows and therefore, the zones of 8140-8160 remain critical levels to watch out
for.
Overall, it is once again evident that any opening or drop
below the 8140-8160 levels wills some temporary weakness creeping into the
Markets. In the same breath, given the gross under-performance of the Indian
Markets vis-à-vis its global peers and the existence of shorts in the system
might lend support at lower levels. We recommend not to take any major
directional positions so long as NIFTY trades below 200-DMA. Post 200-DMA,
select purchases may be continued as IT and other select stocks are likely to
predominantly out-perform in coming days.
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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