Technical indicators hint at weakening momentum; 12,237 key level for Nifty

The Indian market extended its gains for the second consecutive day in the light of steady global cues on December 18.

Both Sensex and Nifty surged to new record highs and closed with gains of 0.5 percent each at 41,559 and 12,222, respectively.

Experts said the market sentiment continues to be positive on optimism that the initial US-China trade pact will allay one of the major risks to global economic growth. On the domestic front, the market expects government measures to continue to revive demand.

Sectorally, the Nifty PSU Bank index fell over 2 percent while Nifty Media pack closed 0.34 percent lower, rest of all sectoral indices ended with gains.

The rupee rebounded from early lows to close marginally up at 70.97 against the US dollar helped by a record-breaking run in equity markets and weak crude oil prices.

On the institutional front, foreign institutional investors (FIIs) bought shares worth Rs 1,836.81 crore, while domestic institutional investors (DIIs) sold shares worth Rs 1,267.57 crore in the Indian equity market on December 18, provisional data available on the NSE showed.

Big News: NCLAT restores Cyrus Mistry as executive chairman of Tata Sons

The National Company Law Appellate Tribunal (NCLAT) has restored Cyrus Mistry as the Executive Chairman of the Tata Group.

NCLAT upheld that the appointment of N Chandrasekaran was illegal. A window of four weeks has, however, been allowed by the NCLAT on the reinstatement of Cyrus Mistry which means Tata Sons can appeal before the Supreme Court within these four weeks against restoring Mistry as the executive chairman.

Technical View:

Nifty closed above 12,200 for the first time and formed a small bullish candle on daily charts as the closing was higher than opening value.

Experts said albeit Nifty50 registered a close above its psychological hurdle of 12,200 levels with new lifetime highs, trading range for the day remained narrow inside 74 points with a small bullish candle.

Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, told, that even though there are no apparent sell signals on the charts, advance-decline ratio remained negative, and some of the momentum oscillators failed to keep pace with the higher tops of the Nifty price chart and continued making lower tops, hinting at weakening momentum.

He said if Nifty manages to get past and sustains above 12,237, then the index shall expand its upmove into the 12,290–12,350 zone.

Three levels: 12,163 | 12,237 | 12,300

Maximum Call OI: 12,000 | 12,200

Maximum Put OI: 12,000 | 12,100

Technical Recommendations:

We spoke to Bonanza Portfolio and here’s what they have to recommend:

Bharat Forge | Buy | LTP: 495.55 | Target: Rs 541 | Stop loss: Rs 470 | Upside: 9%

Mahanagar Gas | Buy | LTP: Rs 1,066.60 | Target: Rs 1,180 | Stop loss: Rs 1,000 | Upside: 10%

Pidilite Industries | Buy | LTP: Rs 1,367 | Target: Rs 1,480 | Stop loss: Rs 1,295 | Upside: 8.50%