Nifty Weekly Outlook (14th to 18th June 2010)

Last Week ending on Friday (11^th June 2010) NIFTY lost almost 0.31% and closed at 5119.35 as compared to the last week’s closing of 5135.50. Since last two weeks Markets are totally news driven. On the very first day of the week, markets observed a gap down opening of almost 125 points, which dragged NIFTY to 4967.30 (week’s low), due to the announcement made by the new government of Hungary about its debt crisis and the continuous new 4-year low made by Euro Currency, also the disappointing US Job Data added to the jitters. For the next two days markets were very range bound and indecisive. On Thursday, a good upside move was seen in the markets as both the BoE (Bank of England) and ECB (European Central Bank) kept their key interest rates unchanged, as expected, also with a bounce in Euro Currency, both European and US markets had shown positive movement. On the last day of the week, markets enjoyed the announcement of good IIP Numbers for the month of April (17.4% Vs 13.5% on monthly basis), by making a high of 5139.05 for the week. NIFTY is taking strong support at its 40-Days EMA of 4946.08. Now if in the next week NIFTY closes below this level, it will call for a Major Correction in the Markets, which may drag it to the levels of 4700 too.  

For the week ended (11^th June, 2010), NIFTY made a Bearish Dragonfly Doji Candlestick, which is characterized by a sharp sell off when the week started. NIFTY moved down going much lower than the opening and on the very last day of the week it witnessed a rally. However this end day rally signifies the potential for further sell offs. The long lower shadow shows how the market started the week with a sell off. If the market opens lower on Monday, we may see a lot of longs eager to sell their positions.

For the next week, again stock specific and sector specific movement in the Indian markets are expected. One can focus on HINDUNILVR (announcement of buyback by the company at Rs. 280 per share), ITC, MARICO, banks like UCOBANK, IDBI, UNIONBANK, CENTRALBK, MAHABANK. On the Global front, announcement of industrial production, housing starts and inflation data may offer more clues on the US economic outlook.

On the Weekly Charts too, RSI (Relative Strength Index) is turning into positive zone, but with the ingoing uncertain global environment, traders are suggested to trade cautiously by following Strict Stop Losses and avoid making fresh investments at this point of time.

For the next week, the level of 5235 will act as an important resistance, whereas the level of 4945 will act as an important support for NIFTY.