Weekly analysis : DESPITE SET-BACKS; MARKET SURPRISES ON UPSIDE - 14/12/2018

DESPITE SET-BACKS; MARKET SURPRISES ON UPSIDE - 14/12/2018.

 

BULLS COME OUT TRUMP, DESPITE ALL ODDS.

 

If the declaration of Five State Election Results was not enough of news, the turmoil at the RBI added to the already news heavy week. With the timing of the Congress sweeping the Election results coinciding with the RBI governor resigning, the Market was supposed to be taken to the cleaners by the Bears. But surprisingly, the Market went down to the 61.8% Retracement level, but against all odds, bounced back from there. The bounce was so vociferous that the Bears got chopped off, as Nifty recovered by more than 500 points in four sessions straight. Interestingly, Nifty has recovered and closed above the 200dma, thereby rendering the long term trend as Up.

 

 


DESPITE SET-BACKS; MARKET SURPRISES ON UPSIDE - 14/12/2018.

 

BULLS COME OUT TRUMP, DESPITE ALL ODDS.

 

If the declaration of Five State Election Results was not enough of news, the turmoil at the RBI added to the already news heavy week. With the timing of the Congress sweeping the Election results coinciding with the RBI governor resigning, the Market was supposed to be taken to the cleaners by the Bears. But surprisingly, the Market went down to the 61.8% Retracement level, but against all odds, bounced back from there. The bounce was so vociferous that the Bears got chopped off, as Nifty recovered by more than 500 points in four sessions straight. Interestingly, Nifty has recovered and closed above the 200dma, thereby rendering the long term trend as Up.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 35204, made a high of 36095, low of 34426 and closed the week at 35962. Thus it closed the week with a gain of 289 points. At the same time the Nifty opened the week at 10508, made a high of 10838, low of 10333 and closed the week at 10805. Thus the Nifty closed the week with a gain of 112 points.

 

On the daily charts, Sensex has formed a Doji whereas Nifty has formed a white body Spinning Top which has taken support at the 200dma. On the weekly chart, both the indices have formed a big white body candle with a longer lower shadow which indicates buying at lower levels. This is in continuation with Bullish trend. Thus daily candlestick pattern is suggesting a neutral bias whereas weekly candlestick pattern is having a Bullish bias.

 

The recent fall in the indices created a Bearish Island Reversal. Nifty is testing the Bearish Gap of 10821-10833, which is acting as strong Resistance. The failure point for the Bearish Island Reversal will be closing above the top i.e. Sensex 36446 and Nifty 10941.

 

Nifty is trading within well defined boundaries; the upper boundary created by the Bearish Gap between 10821-10833. The lower boundary is at Nifty 10450. If the Nifty stays above the upper boundary, it is likely to test the Trend Reversal level of 11089. If the indices break the lower boundary, Nifty is likely to test the Support of 10200.

 

A fall below the Support of Nifty 10450, will see the Correction resuming and the intermediate Correction levels are placed at Sensex 33920-32354-30788 and Nifty 10283-9827-9371. Higher degree Correction levels are placed at Sensex 32688-30742-28796 and Nifty 9875-9293-8710. Thus we have two confluence zones which will act as Support Zones. First Confluence Support Zone is between Sensex 32688-32354 and Nifty 9875-9827. Second Confluence Support Zone falls between Sensex 30788-30724 and Nifty 9371-9293.

 

This week, both the indices tested and closed above the long term average of 200dma (Sensex – 35488 and Nifty – 10756) as well as the short term average of 20dma (Sensex – 35643 and Nifty – 10710). Both the indices continue to remain above the medium term average of 50dma (Sensex – 35027 and Nifty – 10533). Thus the trend in long term and short term has turned Up, whereas the trend in the medium term is still Bullish.

 

MACD and Price ROC are both in Buy mode. RSI (55) still suggests Bullish momentum. Stochastic Oscillator %K (73) is above %D and hence in Buy mode. ADX (14) suggests that a sideways trend. Directional Indicators are in a Sell mode as +DI is below –DI. MFI (58) still suggests Positive Money Flow. OBV continues to make higher top higher bottom. Thus majority of Oscillators are suggesting a bullish bias.

 

Options data for December series indicate highest Call Open Interest is at the strike of 11000 whereas the highest Put build-up is at the strike of 10000. Thus Options data suggests a wide trading range with resistance at 11000 & support at 10000.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10489

10606

10710

10805

10925

11035

11145

Sensex

34896

35246

35605

35962

36362

36747

37061

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy PVR

1557

1526

1604

1653

Buy Vinati Org

1675

1635

1738

1805

Buy TVS Motors

570

559

587

605

Buy Voltas

578

567

595

613

Buy CanaraBank

266

261

274

283


WATCH OUT FOR:

 

PVR
 
Vinati Org
 
 
 
 

 

 

 

 


Disclaimer : The recommendations made herein do not constitute an offer to sell or a solicitation to buy any of the securities mentioned. No representations can be made that the recommendations contained herein will be profitable or that they will not result in losses. Readers using the information contained herein are solely responsible for their actions. Information is obtained from sources deemed to be reliable but is not guaranteed as to accuracy and completeness.

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