Nifty Outlook for 16th November 2010 and Pre Market Calls

Yesterday, on the Daily Charts, NITY made a Bullish Hammer Candlestick Pattern. This pattern signifies that the overall direction of the market is bearish, characterized by a downtrend. The market opens with a sharp selloff implying the continuation of the downtrend. However, prices suddenly turn upwards, the sell-off is quickly abated and bullish sentiment continues during the day with a closing price at or near to its high for the day which causes the long lower shadow. Apparently the market fails to continue in the selling side. In the pre market session, NIFTY had a gap down opening with the negative bias of 100-110 points, after the pre market session, NIFTY opened flat with the negative bias of 7-10 points. A good selloff was witnessed with BANKING, REALTY & INFRA, SUGAR and OMCs Sectors bearing a gap down opening. Till the first half of the trading session, markets traded extremely choppy with the negative bias and made a low of 6039.40 for the day. After the second half, NIFTY recovered from the day’s low by making a high of 6128.75, backed by the BANKING, IT and OMCs Stocks. Finally, for the day the session ended at 6121.60. The near term support for NIFTY comes at the level of 5960.

Net Buying of Rs. 313.68 Crore in Cash Segment and of Net Selling of Rs. 1667.02 Crore in F&O Segment by FIIs was witnessed on Monday's Trading Session.

In F&O Segment Net Selling of Rs. 682.10 Crore in Index Futures, Rs. 1112.93 Crore in Index Options and Rs. 22.40 Crore in Stock Options was witnessed, whereas Net Buying of Rs. 150.41 Crore was witnessed in Stock Futures.

NIFTY NOV FUTURE premium reduced from 19.35 to 12.90 points on Monday.

After the announcement of September IIP (Index of Industrial Production) Data and October Inflation Data, the markets are undecided with the future direction. A 16-months low IIP Data presents a negative picture of the economy, but still the direction of the market is undecided.

China will be coming out with the Foreign Direct Investment in the month of October, Consumer Price Index, DCLG House Price Index; Retail Price Index for the month of October will be announced in UK. European Monetary Union will be coming out with their Consumer Price Index for the month of October and ZEW Survey – Economic Sentiment for the month of November. Germany will also be coming out with ZEW Survey – Economic Sentiment for the month of November. Producer Price Index and Capacity Utilization for the month of October will be announced in US. Other than this, US will be announcing its Total Net TIC Flows for the month of September, Industrial Production, NAHB Housing Market Index and ABC/Washington Post Consumer Confidence for the month of November. 

NIFTY opened below its 20-Days EMA (Exponential Moving Average) of 6146.95 at 6079.90, and touched the 50-Days SMA (Simple Moving Average) of 6037.03, by making a low of 6039.40. Both the moving averages are still supporting the recent positive move. NIFTY is not able to maintain above the levels of 6300 very well, which creates some doubtful situation in its further upside move, whereas the next support level lies at 5960.

MACD (Moving Average Convergence Divergence) has also maintained the positive trend. But at the same time, RSI (Relative Strength Index) reverted from the overbought zone. Traders are suggested to trade cautiously in the markets, as markets have surpassed all the major resistances and have entered in the Over Bought Zone.

For the day, intraday resistance for NIFTY comes at 6130 / 6150 / 6185 levels. At the same time, 6035 / 6000 / 5980 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 50.19 and 56.31, respectively, showing a negative crossover.
2. MACD (26 Days & 12 Days): Their Values are 47.16 and 61.81, respectively. a negative crossover is indicated by both the Moving Averages.
3. +DI: 22.11, -DI: 35.12, ADX: 22.77: The Positive Directional Index has gained strength over the Negative Directional Index and also the Average Directional Index is above 20, indicating the development of strength in the current trend.
4. SMA (50 Days) & EMA (20 Days): The values of these two indicators are 6037.03 and 6146.95.

Pre - Market Calls:

ORCHIDCHEM      Buy only if it trades above 320 for the Targets of 330 & 332, with the strict Stop Loss of 310.

On the Daily Charts, ORCHIDCHEM has made a Long White Candlestick, with a good spurt in Volume. The candle closed above the previous day’s closing too. The stock crossed its 20-Days EMA (Exponential Moving Average) of 303.91, by making a high of 319.75 for the day. The prices started their upside movement at the starting of the trading session and maintained it till the end of the session, despite of highly choppy trading session. The 50-Days SMA (Simple Moving Average) is quoting at 264.98. Stock is facing important resistance at 320. The 14-Days RSI (Relative Strength Index) has strengthened on the Charts and is quoting at 59.39 (RSI below 50 indicates weakness or confirms the Selling signal). The Positive Directional Index (18.87) is still below the Negative Directional Index (22.23), ADX (Average Directional Index) has gained strength on the Intraday Charts and is quoting at 21.41 on the Daily Charts. ADX’s value above 20 and near 40 indicates that the underlying trend is strengthening.  

Hence, it is recommended to buy ORCHIDCHEM only if it trades above 320 for the Targets of 330 & 332, with the Strict Stop Loss of 310.

ANDHRABANK   Buy only if it trades above 180 for the Targets of 184 & 185, with the strict Stop Loss of 177.

On the Daily Charts, ANDHRABANK has made a Bullish Hammer Candlestick Pattern, with a good spurt in volume, but resisted at the level of 180 by making a high of 179.80 and closing at 178.40 for the day. This pattern signifies that the overall direction of the stock is bearish, characterized by a downtrend. The stock opened with a sharp selloff implying the continuation of the downtrend. However, prices suddenly turn upwards, the sell-off is quickly abated and bullish sentiment continues during the day with a closing price at or near to its high for the day which causes the long lower shadow. The Stock crossed its 20-Days EMA (Exponential Moving Average) of 177.78 by making a high of 179.80 and the 50-Days SMA (Simple Moving Average) is quoting at 170.58. The 14-Days RSI (Relative Strength Index) has strengthened on the Charts and is quoting at 53.80 (RSI below 50 indicates weakness or confirms the Selling signal). The Positive Directional Index (20.88) is still below the Negative Directional Index (29.93), ADX (Average Directional Index) has gained strength on the Intraday Charts is quoting at 9.45 on the Daily Charts. ADX’s value above 20 and near 40 indicates that the underlying trend is strengthening.  

Hence, it is recommended to buy ANDHRABANK only if it trades above 180 for the Targets of 184 & 185, with the Strict Stop Loss of 177.