WHAT LIES AHEAD : NEAR-TERM PIC­TURE

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SPOT NIFTY : In­dian stock mar­kets seemed to be in a ‘Santa Rally’ mode as do­mes­tic mar­kets com­pletely shrugged off ex­tremely weak ses­sion in the US mar­kets on Fri­day and started the first trad­ing ses­sion of the week on a cheer­ful note. There­after, Nifty con­tin­ued its ju­bi­lant run and sur­passed its early De­cem­ber high of 10,941, de­spite high volatil­ity seen in the US mar­kets. How­ever, on Thurs­day, Nifty opened the ses­sion lower after the US indices reg­is­tered their low­est clos­ing level in over a year as the US Fed raised in­ter­est rate for the fourth time this year, which was in line with what most mar­ket par­tic­i­pants had an­tic­i­pated. How­ever, the Fed has left the door open for more hikes in 2019 as against the mar­ket ex­pec­ta­tion of no hike or only one rate hike.

Nifty after reg­is­ter­ing low of 10,334 on De­cem­ber 11 ral­lied about 650 points in about last seven trad­ing ses­sions. In the process, the in­dex cleared its 100-day mov­ing av­er­age and also reg­is­tered new swing high of 10,985. How­ever, due to jit­ters in the global mar­kets, Nifty opened with a gap-down on Thurs­day, but the in­dex showed tremen­dous re­silience and man­aged to re­coup al­most the en­tire losses to close flat. Go­ing ahead, we ex­pect the mar­kets to con­sol­i­date or take a breather in the form of mi­nor cor­rec­tion as the present struc­ture on the charts is slightly over­stretched along with the sto­chas­tic os­cil­la­tor, which is cur­rently in the over­bought ter­ri­tory. Dur­ing this phase of tem­po­rary breather, we ex­pect the area of 10,845-10,816 to act as an im­por­tant sup­port level as hold­ing above this re­gion would keep the pull­back op­tions open or else we could test the 200-day mov­ing av­er­age which stands at 10,765. On the up­side, a fol­low-through move above 10,985 is likely to open up for fur­ther up­side to­wards the lev­els of 11,085-11,090. NIFTY DE­RIV­A­TIVES: The In­dian Volatil­ity In­dex (VIX), a gauge for mar­ket’s short term ex­pec­ta­tion of volatil­ity, dipped by 2.25 per cent to end at 14.33. Nifty De­cem­ber 2018 fu­ture last price stood at 10,986 at a pre­mium of 34.30 points over the spot clos­ing of 10,951.70. Nifty Jan­uary 2019 fu­ture last price stood at 11027.10 at a pre­mium of 75.40 point over the spot clos­ing of 10,951.70. The Nifty Put-Call Ra­tio (PCR) Open In­ter­est-wise stood at 1.45 for the De­cem­ber month con­tract. Among Nifty calls, 11,000 strike price from the De­cem­ber month ex­piry was the most ac­tive Call. Among Nifty Puts, 10,900 strike price for the De­cem­ber month ex­piry was the most ac­tive Put. For the De­cem­ber se­ries, the max­i­mum OI out­stand­ing for Puts was at 10,000 strike price, and that for Calls, it was at 11,000 strike price.

NIFTY

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