Thursday, December 29, 2016

Daily Market Trend Guide -- Thursday, December 29, 2016

MARKET TREND FOR THURSDAY, DECEMBER 29, 2016
After a typically rollovers dominated volatile session, the NIFTY ended the day on absolutely flat note while ending with negligible gains of 2 points or 0.02%. Though the NIFTY came off nearly 60-odd points from the high point of the day, its ending flat after a gain of over 124 points in previous session displays good amount of strength that it displayed at Close levels. Today, we expect a flat to modestly positive start to the Markets and we expect the Markets to trade stable with positive bias. Volatility will remain as we enter the expiry of the current derivative series.

For today, the levels of 8100 and 8135 will act as immediate resistance levels while supports will come in at 8010 and 7965 levels.

The RSI—Relative Strength Index on the Daily Chart is 43.0469 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD still remains bearish as it trades below its signal line. However, if the NIFTY maintains current levels with positive bias, we may see a positive crossover on this indicator. On the Candles, a long upper shadow occurred. This formation is relatively less significant as it has not occurred during a rally or at near high price levels.

On the derivative front, the NIFTY December futures shed over 27.23 lakh shars or 20.51% in Open Interest while January series added over 11.75 lakh shares or 10.76% in Open Interest. NIFTY PCR continues to hover around 1.

While having a look at pattern analysis, the NIFTY has reaffirmed the support at 7900-7920 zones. The reason being that it was a important pattern support in form of a Double Bottom and in the session before this, it reaffirmed as it saw a strong rally from these lows. Going forward, so long as the NIFTY trades above 7920 levels, we will continue to see positive bias in the Markets. However, given the overall structure of the Charts, we can expect the Markets to consolidate more and any runaway rise is not expected. Going ahead, the levels of 8275 will be important levels to watch for.

Overall, we continue to recommend remaining light in the Markets. Major exposures should be avoided until the NIFTY confirms the reversal and the recent bottom. Until then buying modest quantities of select stocks can be done. Select stocks and sectoral out-performance will remain evident. Volatility will remain ingrained as we head into the expiry of the current derivative series. Overall, positive caution is advised 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



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