Nifty Outlook for 09th December 2010 and Pre Market Calls

Yesterday, NIFTY made a Small Black Candlestick after the formation of a High Wave Candlestick. After indecision in the markets the day before yesterday, markets witnessed a good selling pressure in the last session. NIFTY had an opening in the negative bias of almost 20 points and within an hour of trading it dipped 50 points. Again the market was dragged by a huge amount selloff witnessed in BANKING & FINANCE and METAL Stocks. OMCs (Oil Marketing Companies) witnessed a good buying interest with the news flow of increment of petrol prices by Rs 1.50-2 per litre early next week, while a hike in diesel prices by Rs 2 a litre by State-owned oil companies, under the Government consideration. Later on with the opening of European markets too, NIFTY witnessed a good selloff and made a low of 5878.60 (down almost 90 points).  BANKING, TEXTILES stocks were brutally crushed for the day. Finally, for the day NIFTY ended at 5903.70.

Net Selling of Rs. 1484.90 Crore in Cash Segment and of Rs. 1031.85 Crore in F&O Segment by FIIs was witnessed on Wednesday's Trading Session.

In F&O Segment Net Selling was witnessed in Index Futures, Stock Futures and Stock Options Segment of Rs. 1276.38 Crore, Rs. 194.08 Crore and Rs. 18.92 Crore, respectively, while, Net Buying of Rs. 457.52 Crore was witnessed in the Index Options Segment.  

NIFTY DEC FUTURE ended with the premium of 20.25 points to the Spot NIFTY. 

Technically, NIFTY witnessed a bounce back from the levels of 5690 to 6070, after facing a continuous downfall from 6358 to 5690 levels. Now the level of 5960 is acting as a strong support which if breaches again on the closing basis, NIFTY may again test the levels of 5720.

On the Economic Front, JAPAN will be coming out with its Q4 BSI Large Manufacturing and Domestic Corporate Goods Price Index for the month of November. Unemployment Rate and Employment Change for the month of November will be announced in AUSTRALIA. GERMANY will be coming out with its Consumer Price Index for the month of November. Halifax House Prices for the month of November, Goods Trade Balance and Total Trade Balance for the month of October and BoE (Bank of England) Interest Rate Decision will be announced in UK. US will be coming out with its Initial Jobless Claims, Continuing Jobless Claims and Wholesale Inventories for the month of October. 

NIFTY is trading below its 20-Days EMA (Exponential Moving Average) of 5972.66 and the 50-Days SMA (Simple Moving Average) of 6060.79. Both the Moving Averages are indicating a negative crossover, with short term moving average crossing the long term moving average from upside. The first immediate resistance for the NIFTY comes at 5840 on the Closing Basis.

MACD (Moving Average Convergence Divergence) has entered into negative territory now. But at the same time, RSI (Relative Strength Index) reverted from the overbought zone. Brutal selling in BANKING stocks, which maintained the markets to life time high, indicates a very cautious approach to be followed while trading in the markets at this stage. Investors are also suggested to avoid making fresh investments at this stage.

For the day, intraday resistance for NIFTY comes at 5920 / 5960 / 5985 levels. At the same time, 5850 / 5820 / 5780 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 44.31 and 46.39, respectively, showing a negative crossover.
2. MACD (26 Days & 12 Days): Their Values are -33.64 and -50.88, respectively. a negative crossover is indicated by both the Moving Averages.
3. +DI: 18.26, -DI: 28.18, ADX: 25.81: 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 6060.79 and 5972.66. Both the Moving Averages are showing Negative Crossover.

Pre - Market Calls:

CENTURYTEX       Sell only if it trades below 413 for the Targets of 405 & 400, with the strict Stop Loss of 418.

On the Daily Charts, CENTURYTEX has made a Long Black Candlestick, with a slight spurt in volume. Yesterday it was 5-days streak of selling pressure in the stock. The stock is already trading below its 20-Days EMA (Exponential Moving Average) and 50-Days SMA (Simple Moving Average) of 457.99 and 495.76, respectively. The stock made a low of 416 for the day and ended near the day’s low at 418.15. The stock if breaches the PSAR (Parabolic Support and Resistance) quoting on the daily chart at 414.15, will be weak for the next day. The 14-Days RSI (Relative Strength Index) is quoting at 31.17 on the Charts (RSI below 50 indicates weakness or confirms the Selling signal). The Positive Directional Index (11.05) is below the Negative Directional Index (33.08), ADX (Average Directional Index) has gained strength and is quoting at 39.41 on the Charts. ADX’s value above 20 and near 40 indicates that the underlying trend is strengthening.  

Hence, it is recommended to sell CENTURYTEX only if it trades below 413 for the Targets of 405 & 400, with the strict Stop Loss of 418. 

CANBK                Sell only if it trades below 655 for the Targets of 640 & 635, with the strict Stop Loss of 668.

On the Daily Charts, CANBK has made a Long Black Candlestick, with a good spurt in volume. The prices are making lower lows since touching their life time high. The stock is trading below its 20-Days EMA (Exponential Moving Average) and 50-Days SMA (Simple Moving Average) of 725.69 and 706.49, respectively. The stock is facing strong support at 655 levels, which if breaches a further southward move will be witnessed in the stock. The 14-Days RSI (Relative Strength Index) is quoting at 38.29 on the Charts (RSI below 50 indicates weakness or confirms the Selling signal). The Positive Directional Index (14.46) is below the Negative Directional Index (29.21), ADX (Average Directional Index) has gained strength and is quoting at 30.99 on the Charts. ADX’s value above 20 and near 40 indicates that the underlying trend is strengthening.  

Hence, it is recommended to sell CANBK only if it trades below 655 for the Targets of 640 & 635, with the strict Stop Loss of 668. 

IDBI                     Sell only if it trades below 154 for the Targets of 149 & 146, with the strict Stop Loss of 156.

On the Daily Charts, IDBI has made a Black Opening Marubozu Candlestick. The prices are making lower lows since touching their life time high. The stock is trading below its 20-Days EMA (Exponential Moving Average) and 50-Days SMA (Simple Moving Average) of 170.37 and 171.60, respectively. The stock is facing strong support at 154 levels, which if breaches a further southward move will be witnessed in the stock. The 14-Days RSI (Relative Strength Index) is quoting at 35.63 on the Charts (RSI below 50 indicates weakness or confirms the Selling signal). The Positive Directional Index (15.78) is below the Negative Directional Index (32.37), ADX (Average Directional Index) has gained strength and is quoting at 30.77 on the Charts. ADX’s value above 20 and near 40 indicates that the underlying trend is strengthening.  

Hence, it is recommended to sell IDBI only if it trades below 154 for the Targets of 149 & 146, with the strict Stop Loss of 156.