Markets may turn rangebound
The markets started on a weak note last week on the back of exit poll results. However, the markets bounced back even after the dismal poll results for the BJP. The breadth of the market remained firm amidst high volumes.
The FIIs remained net sellers in the cash segment but were seen hedging their positions by being buyers in the derivatives segment. The DIIs once again turned buyers during the week. The US markets remained rangebound ahead of the Federal Reserve meet on 19th December.
Crude oil prices, which moved higher on expectations of production cuts to reduce the inventories, softened on Friday due to renewed concerns of slower global economic growth as China reported a drop in retail sales and industrial output growth for November, highlighting the fact that US-China trade war is affecting its economy. On the domestic front, the
RBI Board meet with its new Governor at the helm is likely to announce some measures to reduce liquidity concerns and prop up demand in the sluggish economy, which in fact reported good IIP numbers and lower WPI numbers. Technically, the prevailing positive technical conditions helped the markets move higher. The MACD, Stochastic, RSI and KST are all placed above their respective averages on the daily chart. Further, the KST and RSI are placed above their respective averages on the weekly chart. Moreover, the Nifty is placed above its 50-day SMA and 200-day SMA. These positive technical conditions could lead to regular buying support.
The prevailing negative technical conditions, however, still hold good. The Stochastic and MACD are placed below their respective averages on the weekly charts. Further, the Stochastic is placed in the overbought territory on the daily chart. The Nifty is still placed below its 100-day SMA. The Nifty’s 50-day SMA is also placed below its 100-day SMA and 200-day SMA signaling a ‘Death Cross’ breakdown. All these negative technical conditions could lead to profit-booking and selling pressure, especially at the higher levels.
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The +DI line has again moved above the -DI line and is placed above 26, which indicates that the buyers are gaining strength. The ADX line is still placed below 15, which indicates that the markets lack secular trend and strength. The Nifty has sustained above the 10756 level, which augurs well for the markets. It is important for the Nifty to sustain above 10756 for further buying to emerge and to move higher to test the 10843 level. 10625-10589 is an important support range. The markets could turn rangebound. The news flow from the RBI board meeting and forthcoming Federal Reserve meet will influence the market sentiment. Meanwhile, the markets will take cues from the DollarRupee exchange rate, global markets and crude oil prices. Technically, the Sensex faces resistance at the 36350, 36602, 37165, 37490 and 38125 levels and seeks support at the 35606, 35400, 35187, 34748, 34344, 33723 and 33349 levels. The resistance levels for the Nifty are placed at 10843, 10942 and 11008 while its support levels are placed at 10756, 10710, 10625, 10589, 10526, 10489 and 10440.