Nifty Weekly Outlook (04th to 08th October 2010)

Last Week ending on Friday (01^st October 2010) NIFTY gained almost 2.08% and gave a robust closing of 6143.40 as compared to the last week’s closing of 6018.30. NIFTY is moving ahead day-by-day to complete the targets of Inverse Head & Shoulders Pattern, which is a Bullish Reversal Pattern. This pattern on NIFTY is targeting it to the next new life time high, i.e., it may cross its previous life time high of 6375 too. After giving a strong breakout from its Bullish Consolidation Pattern, NIFTY kept its northwards movement on by again making a Short White Candlestick on the weekly charts. Last week, on the very first day of trading NIFTY made a high of 6073.50, which was crossed successfully on the last day of trading (Friday) with a high of 6153.10. A choppy and volatile F&O Expiry session was also witnessed on Thursday, which was also the D-Day of 60 years old Ayodhya Issue. Record Turnover of `2.20 Lakh Crore was witnessed on that day with a market rollover of almost 85% in F&O. The decision came neutral, which buoyed the investors and lifted NIFTY almost 115-120 points on Friday. A good buying interest was witnessed in METALS, REALTY & INFRA, BANKING & FINANCE, PHARMA, SUGAR, IT and AUTO (driven particularly by excellent sales numbers) Sectors. NIFTY made a new 52-weeks high or say 32-Months high of 6153.10 and even closed at the 32-months high of 6143.40. For the week NIFTY made a low of 5963.60. NIFTY has moved much above its 40-Days EMA (Exponential Moving Average) of 5292.32 and the 20-Days EMA of 5883.65.

A continuation of the same northwards movement is expected with an excellent buying action of FIIs (Foreign Institutional Investors) again with a Sectoral Cycle. In the month of September so far, FIIs were net buyers of `29,195.80 Crore. With the ongoing negative global cues (especially in European Markets), the emerging economies like India and Brazil are attracting the funds, the effect of which is very well witnessed. Traders are suggested to trade cautiously by following Strict Stop Losses and avoid making fresh investments at this point of time.

All the major International Indices after facing resistance are now trading near their important support levels, now from these levels a good bounce can be expected, or if the support breaches, a correction can be expected in the near term.

On the Global front, in Asia, Chinese Markets will be witnessing holiday till 07^th October, 2010 on the Occasion of National Day, The Bank of Japan could unveil new measures to support its economy this week, as officials eye a stubbornly strong yen. In Europe, Airlines, U.K. retailers are in focus next week. On the economic agenda, European Central Bank and Bank of England interest-rate decisions are due to be announced. In US, a preview of the market news is expected in the coming week, which will feature major economic news along with earnings reports from Alcoa, Micron Technology and Pepsi. 

For the next week, the level of 6260 & 6300 will act as an important resistance, whereas the level of 6025 & 5950 will act as an important support for NIFTY.