Weekly Trend Report
- 09th December 2024
Week Gone By
The domestic equity benchmarks witnessed strong gains during the week, rising for the third week in a row. The BSE Sensex jumped 597.67 points or 0.74% to 80,845.75. The Nifty 50 index gained 181.10 points or 0.75% to 24,457.15. In contrast, global markets had mixed reaction as investors reacted to the recent political turmoil in South Korea. The Nasdaq and the S&P 500 rose to record closing highs on Friday following upbeat forecasts from Lululemon Athletica and other companies and as U.S. jobs data fueled expectations the Federal Reserve would cut interest rates this month. To ease the potential liquidity stress, RBI has decided to reduce the CRR of all banks to 4.0% from 4.25% of NDTL in two equal tranches of 25 bps each .
Week Ahead
India’s retail inflation as measured by the consumer price index or CPI for November will release on Thursday, 12 December 2024. China’s inflation data for November will release on Monday, 9 December 2024. US Japan’s Business Confidence data for the fourth quarter will release on Friday, 13 December 2024. Globally, United States Core Inflation data for November will release on Wednesday, 11 December 2024 . Additionally, United States Producer Price Inflation data for November will release on Thursday, 12 December 2024.
Technical Overview
- The Nifty50 index initiated the trading week on a positive trajectory after establishing immediate support within the previous gap-up area from the penultimate week. This favourable condition set a tone for the week, as the index demonstrated a pattern of higher highs throughout the trading sessions, culminating in a closure that marked a gain of 547 points compared to the previous week’s closing figure, albeit accompanied by relatively lower trading volume.
- Notably, this performance corresponds to a third consecutive week of higher highs, effectively reversing 1,414 points of losses following a pronounced technical pullback from the 50-Weekly MA.
- The VIX declined by 2% over the week, settling at 14.14, which reflects a reduction in market volatility. The conclusion of the trading week was characterized by major broader and sectoral indices maintaining their uptrend status, with no indications of persistent negative momentum, representing a positive shift in market dynamics.
- From a market breadth perspective, the percentage of stocks trading above their shorter-term moving averages has entered the oversold zone.
- Furthermore, the percentage of stocks trading above the 50-Day MA has exhibited a significant recovery, successfully reclaiming the median threshold after remaining below it for nine consecutive weeks. Stocks trading above 200-Day MA have remained above median levels for the consecutive week now, highlighting a substantial positive development. The sustainability of these trends is anticipated to contribute to the accumulation of bullish momentum across the general market.
- In terms of momentum breadth, the number of participating momentum stocks has consistently improved, suggesting a potential transition from a hard-money to an easy-money market.
- Technically, despite the Nifty50 index having reclaimed a pivotal resistance level near 24540 and the 50-Day MA moving average, specially the extended nature of broader indices over the past two weeks indicates that a modest pullback or consolidation phase may be warranted to consolidate bullish momentum.
- The behaviour of the Nifty50 in the zone of 24790-25000 remains critical to monitor, as this area serves as a neckline for an inverted head and shoulders pattern that emerged in late October. The index is currently positioned with immediate support at the 50-Day moving average levels. Sustaining movement within the zone of 24500-24130 will be essential for the index to strengthen its bullish outlook and facilitate continued upward momentum.
- The swing confidence remains at 100, indicating a stock-specific approach is advisable moving forward, allowing for maximum permissible open risk.
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