Weekly Market Outlook for 04 December to 08 December

Our markets started the truncated week on a positive note and it rallied higher throughout the week. The first day of the December month infact witnessed a new record as the Nifty surpassed its previous high and ended in uncharted territory above 20250 with weekly gains of almost two and a half percent.

Nifty Today:

It was a swift move for the Nifty index as it rallied higher post a breakout from the recent consolidation phase. The index marked a new record high supported by broad market participation. Now this indicates that the near term trend still remains positive, but short term traders should also be alert as the index has already rallied higher in last one month and the momentum readings on the lower time frame charts are in overbought zone in Nifty as well as in the Midcap and the Small-Cap indices. When the trend is strong, the momentum could continue in the overbought zone as well and hence, we do not advise taking any contra bets here, rather one should trade with a positive bias but trade with proper risk management and also prefer profit booking at higher levels. The outcome of the certain state elections over the weekend could have some impact at the start of the week; and traders should keep a close watch on the immediate support which is placed around the 20000 mark. On the higher side, the reciprocal retracement theory indicates possible targets in the range of 20500-20600 if the rally continues going ahead. 

New record high for Nifty, enters uncharted territory

The RSI oscillator in the mid and small-cap indices are highly overbought and thus the risk reward ratio doesn’t seem much favorable there. One can look for profit booking there and trade with focus on certain large cap names. One can look for opportunities from the banking and FMCG space as the Bank Nifty index has given a breakout during the week gone by while the FMCG index too has seen an upmove post a long consolidation phase.

Nifty, Bank Nifty Levels and  FINNIFTY Levels: