Knack for a bounce back

Updated: Dec 26, 2016, 11:09 IST | Alex K Mathews

We can expect resilience as early as in the second half of today

Pope Francis delivers his speech from the St Peter’s basilica. He spoke about terrorism victims, days after the truck attack that left 12 dead at a festive Berlin market. Pic/AFP
Pope Francis delivers his speech from the St Peter’s basilica. He spoke about terrorism victims, days after the truck attack that left 12 dead at a festive Berlin market. Pic/AFP

Nifty has moved down below crucial support levels and indicates that the weak outlook will continue. The immediate support lies at 7913, if that level has take taken off then we could see Nifty moving further down. Chances of this are very low because weekly and daily charts show an oversold situation for the Nifty. Most probably then, the markets may trade sideways in initially this week, but we can expect bounce back before the futures and options expiry which will be on December 29. There are possibilities that even in the second half of Monday which is today we can expect bounce back because the US and European stock exchanges are on holiday. FII are net sellers, DII were supporting the market to a certain extent. Domestic investors are still staying on the sidelines, in order to get more confirmed trends in the markets. Nifty has second support at 7644. The immediate resistance for the Nifty lies at 8076 and 8126. Like Nifty; Bank Nifty has also entered in the oversold region, which, in fact, can support the market next week. Bank Nifty has immediate support at 17825 and 17552. Bank Nifty has resistances at 18000 and 18241.

Still very bullish
As expected, the Dow Jones is making new highs every day, but higher level profit booking trimmed most of its gains due to the overbought situation. The Dow Jones is still bullish and has resistance at 19992 and 20251. Dow has support at 19816 and 19734. S&P 500 VIX is also suggesting further upside to the market because the VIX is at 11.44, showing confidence amongst investors. The latest data from the US regarding GDP was above market expectation. US GDP increased at 3.5 per cent annually, instead of the previously reported 3.2 per cent pace. US consumer spending was below street expectation on the other hand, it rose 0.2 per cent in November. Dollar index was steady at 103.06 and it is very close to its 14-year high.

The US pending home sales, continuing jobless claims, and US Chicago PMI data are due this week. From the EURO zone balance of trade, unemployment benefit claim, retail sales, consumer confidence and business confidence data will come out. Foreign Reserve and Infrastructure out data is due from India.

Eye on oil
We can expect banking, oil market companies, sugar companies and selective IT companies to support the market this week. Tyre companies, auto companies, metal counter etc will face further sell-off. Nifty metal index has short term resistances at 2645 and 2715. It has support at 2525 and 2445.

Crude is still positive and has resistance at $54.04 per barrel. Minor profit booking can be expected due to the Kurdistan Regional Government in Iraq which decided to continue with its oil production ignoring OPEC and non OPEC oil producer’s decision over oil production cuts, due to urgency of having money to fight against the Islamic State of Iraq and Syria (ISIS) terrorism. Libya would like to keep the pace of the oil production steady. Crude has resistance at $55 per barrel and support at $51.38 per barrel. Price declines can be utilised to enter in the commodity.

Alex K Mathews is the founder of www.thedailybrunch.com

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