MARKET REPORT December
19, 2014
Markets saw a strong technical rebound on back of positive
global cues and oversold technical indicators and ended the day with decent
gains. The Markets saw a nearly gap up opening as it opened strong. However,
the morning trade saw some paring of opening gains as the Markets retraced from
the opening highs later in the morning trade. However, the second half of the
session saw the buoyancy returning the Markets as the Markets strengthened
further to touch the opening levels again. It further went on to form the day’s
high of 8174.30 towards the end of the session. These levels were sustained and
the Markets finally ended the day at 8159.30, posting a net gain of 129.50
points or 1.61% while forming a sharply higher top and higher bottom on the
Daily Bar Charts.
MARKET TREND FOR FRIDAY, DECEMBER 19, 2014
The remains crucial again as the trend of the Markets would
decide if the Markets would continue with its pullback or not. The Markets have
ended the day near a pattern resistance. Technically speaking, we can expect a positive
start to the session and the Markets are likely to trade positive in the
initial trade. It would be important for the Markets to open and trade above
8165 levels in order to successfully continue with the pullback.
The levels of 8175 and 8230 (50-DMA) would act as immediate
resistance for the Markets. The supports would come in at 8064 levels.
The RSI—Relative Strength Index on the Daily Chart is
39.9828 and it has just moved above from bottoming area which is bullish. It
does not show any bullish or bearish divergence or failure swing. The Daily
MACD still remains bearish while trading below its signal line. On Candles, A morning star occurred (this is a three-candle pattern). This is a bullish pattern that often
signifies a major bottom.
On the derivative front, the NIFTY December
futures have shed over 19.20 lakh shares or over 8.02% in Open Interest. This
very clearly signifies that there has been a heavy short covering from lower
levels which has fuelled this pullback. It would be extremely important to see
that this gets replaced with a fresh buying from here on.
Taking a cue from pattern analysis, the
Markets have held on to support at its 100-DMA at Close levels. Though the
Markets have seen a technical bounce back, it still faces resistance at 50-DMA.
This is the support that the Markets broke on its way down and therefore would
act as resistance on its way up. It would be very necessary that the Markets
add Open Interest as it is extremely important for the Markets to see fresh
buying in order to continue with its pullback. Mere short covering fuelled
rallies will not take the Markets much further.
Going on from here, it is extremely necessary
to remain highly watchful in the Markets. The Markets have taken a first step
towards by giving a technical pullback. It would be necessary that it sees
fresh buying going ahead. As the Markets are not yet completely out of the
woods, it is necessary to remain highly selective in making fresh purchases. In
order to avoid intermediate weakness, it would be necessary for the Markets to
move past and close above its 50-DMA. Overall, while maintaining liquidity,
positive caution is continued to be advised for the day.
Milan Vaishnav,
Consulting Technical Analyst,
Af. Member: Market Technicians Association (MTA), USA
Af. Member: Association of Technical Market Analysts, INDIA
www.MyMoneyPlant.co.in
Af. Member: Market Technicians Association (MTA), USA
Af. Member: Association of Technical Market Analysts, INDIA
www.MyMoneyPlant.co.in
+91-98250-16331
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