Between December 21 and December 24, indices have taken a big hit, falling nearly 1,000 points on the Sensex
The Santa rally is likely to have fizzled out as concerns on global growth and a resultant sell-off in crude oil prices could weigh on the market, experts told Moneycontrol.
A rally in equity benchmarks ahead of Christmas is referred to as the Santa rally.
To put things in perspective, the recent high that the Nifty witnessed was on December 11, 2018. Between that session and December 21, 2018 Nifty 500, Nifty Midcap and Nifty Smallcap indices have seen largely positive moves.
In Nifty 500, 404 companies have given positive returns, while Nifty Midcap saw around 84 stocks gaining. The Nifty Smallcap index, on the other hand, saw 85 stocks giving good returns.
However, the market’s movements in the past couple of sessions has raised suspicions over the sustainability of this upmove.
Between December 21, 2018 and December 24, 2018, indices have taken a big hit, falling nearly 1,000 points on the Sensex. The Nifty has managed to breach 10,700-mark as well. This, especially at a time when it looked almost certain that the Nifty could hit 11,000.
“With Christmas dawning upon us, Santa rally might have ended close to 11000 levels with Friday’s reversal kind of scenario,” explained Mazhar Mohammad, Chief Strategist — Technical Research and Trading Advisory at Chartviewindia.
However, on the downside if bulls manages to defend 200-day moving average whose value is present around 10760 levels then they will retain chances of making a comeback. But as global markets are almost witnessing the rout since the beginning of December with almost new yearly lows bulls cannot continue to triumph on Indian bourses and should join the bear party sooner than later, he added.
Technical experts at Centrum Broking said that the RSI oscaillator has turned soft from its resistance level of 60-62. It is now showing negative divergence on the daily charts, which is a negative sign for the index.
“Considering overall chart structure and the derivatives data, we believe that the ‘Santa Rally’ has been over and now we may see a corrective move in index towards 10500 marks in coming days,” Jay Purohit, Technical & Derivatives Analyst at Centrum Broking told Moneycontrol in an interview.
What should you do?
Mohammad advises traders to deal with high beta names tactfully.
“As we are heading towards major political events, we advise traders to book profit in high beta names and make use of sharp fall in market, if any, ahead of elections to accumulate some of the good quality high beta names.”
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on Moneycontrol are their own, and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
