NIFTY WEEKLY OUTLOOK & OPTION CALL PUT TIPS FOR 9 DEC 13 DEC 2019

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WEEKLY RESISTANCE FOR NIFTY: 12100, 12200, 12300

 PIVOT POINT: 11900

WEEKLY SUPPORT FOR NIFTY:  11800, 11700, 11600

WEEKLY CHART FOR NIFTY

DAILY RESISTANCE FOR NIFTY: 12000, 12050, 12100
PIVOT POINT: 11900
DAILY SUPPORT FOR NIFTY:  11800, 11750, 11700
DAILY CHART FOR NIFTY

The index has undergone a corrective move in three out of four trading sessions so far this week. Even the market breadth remained in favor of declining counters, which indicates profit booking in individual stocks. At this juncture, it is trading this week with a loss of around 0.31 percent. On the other hand, the Nifty Bank index too suffered some selling and is trading with a loss of 0.73% from its previous week’s close.  Monday morning, the global cues were excellent and were ideal to have a head start for the first week of December. In line with this, we had a gap up opening with a fair margin; but it was merely a formality to remain in sync with the Asian traders. Within a few seconds, the lead got disappeared and we were back below 12100. After this, the Nifty made one more attempt to inch higher but once again this short up move got sold into. During the remaining part of the day, market consolidated with no major movement and eventually ended the session with a negligible loss on Monday. Similar to Monday’s session, the early morning gap up opening was merely a formality as we saw index giving up all gains in few minutes of trade. In fact, the selling aggravated as the day progressed and in the course of action, Nifty was at a kissing distance from 11950. At one point, things looks extremely bleak; but fortunately for us, patient buyers entered on declines which helped index recoup some portion of its losses at the close. On Wednesday once again the escalated concerns over Sino-US trade war spooked the market participants across the globe. Fortunately for us, we did not react so negatively to this development as some of the global peers did. After seeing a marginal cut at the opening, the index picked up strong momentum in the upward direction in first 30 minutes of trade. In the process, Nifty managed to reclaim the 12000 mark. However, the selling recurred at higher levels; resulting into a nosedive below 11950 at the midst. By the grace of god, traders / investors were given yet another opportunity to smile as we witnessed not only a v-shaped recovery but also a convincing break above morning high to end the session by adding over four tenths of a percent to the bulls’ kitty On Wednesday, we had a strong last hour surge in our market, which probably was the reflection of hopes built for yet another rate cut by RBI. In line with this, the market was trading with a positive bias ahead of the monetary policy; but ‘Status Quo’ from RBI clearly disappointed market participants and as a result, the Nifty gave up all gains and slipped into a negative territory. The most sensitive index, Bank Nifty tumbled from morning highs and remained under pressure thereafter. Eventually, the day ended with some cuts on indices as well as the broader market.

NIFTY: A STRONG SUPPORT WILL BE @ 12200; STRONG RESISTANCE LEVEL SEEN @11800

We continued with our ‘Buy on declines’ strategy and as expected, the market was setting up around key support of 11900 to unfold the next leg of the rally. Yesterday’s late surge certainly validates this point and the way both (Nifty and Bank Nifty) key indices are shaped up now, we will not be surprised to see decent moves in next couple of days. Going ahead, the Nifty is likely to continue its march towards 12090 – 12140 and on the downside, 11850 followed by 11800 has now become a sacrosanct support zone. The strategy played out well and in spite of slightly weak day on Friday, we continue with our positive stance on the market. The benchmark index has registered a highest ever weekly as well as Monthly close and the way charts are shaped up, we expect continuation of the northward trajectory. For the coming week, our projected targets are around 12200 – 12290 and if we stretch a time period a bit, we will not be surprised to see index heading towards 12400 – 12500, which coincides with key Fibonacci ratios. On the lower side, 12000 followed by 11883 are now likely to provide good support for the market. Traders are advised not to remain sceptical as the recent rally has been vertical in nature and looks a bit overbought. In such a strong trend, market generally tends to give gravity defying moves and hence, one should refrain from taking contradictory bets with a positional view. Rather use declines to go long and keep focusing on potential stocks which are likely to participate in the probable rally.

 TECHNICALLY SPEAKING.

The Nifty spot index has been struggling to clear the 12150–12200 zone, which was the potential reversal zone of a bearish harmonic AB=CD pattern. Looking at the weekly chart of the Nifty spot, it can be construed that the index is trading in the 11,900–12,150 range, which is similar to the previous week. The short-term trend would be dented only on a breach of the 11,900 mark. Thus, for some more time, we feel traders should adopt the mean reversion technique in the coming week. On the upside, only a sustainable breakout above 12,150 would propel the index towards higher levels. In the near term, the market may remain positive and could rise further. This opportunity should be used by traders to start booking short-term profits in long positions in coming weeks. Another reason for this view is that there is a negative divergence in the weekly RSI of the Nifty spot, which could trigger some consolidation or profit booking. Going forward, it is better to remain stock-specific and opt for stocks that have the potential to rise rather than the ones that are overbought. On the downside, 11850 would now act as a sheet anchor for the markets. A move below this level could start the corrective move sooner than expected.