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Market Outlook 17 December 2014               some interesting links >


Nifty (8067.50, -152.00, -1.85%)

Not everything is technically good for the bull market anymore! The fact that we had to see a close below 8080 on high volume selling and the 14-RSI oscillator on the end-of-day (EoD) chart hitting sub-35 levels to close at 29.75 do not augur well. Whatever had been the strength of the erstwhile uptrend and its duration, the medium term uptrend fell below the 89-day EMA @8084.65 along with the oscillator breakdown below the 35-mark suggest we need to very closely watch the subsequent intermediate uptrends and also watch for the top formation of those uptrends to see if they manage to post a higher high than the Dec 04 top of 8626.95. In case, they don’t we need to be very vigilant and be ready to take corrective actions on our medium to long term purchases. The point that we are making here is that if it is a strong and vibrant bull market then it should not have closed below the 89-day EMA and secondly, the 14-RSI on the EoD chart should not have fallen below the 35-mark. In this case, it has even fallen below even the 30-mark.

As for the day, we can expect a bounce back given the fact that Asian markets are in the green and even there is hardly any weakness in the SGX Dec Nifty contract it is down just by 1 point @8111.00 as we write this Market Outlook. First, the most critical zone for the day would be between 8080 and 8085, the index needs to stay above that firmly to signal a probable onset of a much needed pullback rally. The Nifty is far too stretched from its 5-day EMA @8216 and bounce back appears very much likely if given a minor fillip, which—by the way—is there through better sentiment in international markets. Now, the strong supply zone between 8159 and 8216 needs to be taken out if we are see any worthwhile recovery. Only when the index gets past 8256 – 8267, which incidentally the major resistance zone for the day, we can expect a sustained uptrend to shape up.

  • Most critical zone for the day: 8080 – 8085, its initial resistance levels

  • Strong resistance zone: 8159 – 8216

  • Major resistance zone: 8256 – 8267

  • Strong support: 8033 – 8000

  • Major support: 7942 – 7864


Bank Nifty (17830.55, -542.10, -2.95%)

The Bank Nifty had the largest absolute point (-542.10) fall over the last one year, and the second largest (-2.95%) fall over the same period yesterday; the largest fall in percentage terms happened on Jan 27 this year when the index fell by more than 4 percent. While recording such a big fall during the last session it violated some very important support around 18050, and reclaiming those levels have now become more than necessary to post any significant rearguard action. For any recovery that might happen today, watch out for the levels between 18033 and 18052 as the most critical levels during the day. A close above 18100 today would be very helpful for the bulls to stage any strong recovery.

  • Most critical levels for the day: 18033 – 18052

  • Strong resistance: 18100

  • Strong support: 17745 – 17716

  • Major resistance: 18205 – 18272

  • Major support: 17612 - 17595

 




Note (1): Either on the long side or on the short side if at any moment a counter is not moving beyond an initial or interim target to the final target book profits. Once initial target is crossed, you can use that as your trailing stop-loss level.



Rajat K. Bose
Notes (2): (please read).
* All prices relate to the NSE, unless otherwise mentioned.
* Calls are based on the previous trading day's price activity.
* The call is valid for the next trading session only unless otherwise mentioned.
*

Stop-loss levels are given so that there is a level below/above, which the market will tell us that the call has gone wrong. Stop-loss is an essential risk control mechanism; it should always be there.

*

Book, at least, part profits when the prices reach their targets; if you continue to hold on to positions then use trailing stops to lock in your profits.

*

Don't chase a stock, if you are unable to buy a stock because it hits circuit levels on successive days, don't buy that.

* The analyst and his clients may or may not have positions in the securities mentioned above.
Trading involves considerable risk. Trade at your own risk to the extent you are comfortable. The analyst shall not be responsible for any losses incurred for acting on these recommendations.
Rajat K Bose
 

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