Nifty Outlook for 10th December 2010

Yesterday, NIFTY made a Long Black Candlestick. A brutal selloff supported by panic all over the counter was witnessed in the last session. NIFTY had a quiet opening with a negative bias of almost 20 points. Initially, a short covering in BANKING stocks was witnessed, but at the same time a good selling pressure in METALS, MINING & CEMENT Stocks was witnessed. A selloff in Mid Cap and Small Cap (which were down almost 3-4% for the day) created a panic all over the counters of the market. Many of the Mid Cap and Small Cap stocks hit the lower circuit for the day. Markets all over the globe, may it be Asian or European were in Green. For the day, NIFTY dipped till the levels of 5742.30 (tanking almost 150 points for the day), breaching all the important Support levels of the day and ended at 5766.50 levels.

Net Selling of Rs. 1296.30 Crore in Cash Segment and Net Buying of Rs. 820.01 Crore in F&O Segment by FIIs was witnessed on Thursday's Trading Session.

In F&O Segment Net Buying was witnessed in Index Futures, Index Options and Stock Futures  Segment of Rs. 450.26 Crore, Rs. 379.87 Crore and Rs. 3.85 Crore, respectively, while, Net Selling of Rs. 13.97 Crore was witnessed in the Stock Options Segment.  

NIFTY DEC FUTURE ended with the premium of 25.50 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 5750 is acting as a strong support which if breaches again on the closing basis, NIFTY may again test the levels of 5500.

On the Economic Front, JAPAN will be coming out with its Consumer Confidence for the month of November. Trade Balance for the month of November will be announced in CHINA. AUSTRALIA will be coming out with its Foreign Reserves for the month of November. Wholesale Price Index for the month of November will be announced in GERMANY. UK will be coming out with its Producer Price Index for the month of November. Import Price Index and Monthly Budget Statement for the month of November, Trade Balance for the month of October and Reuters/Michigan Consumer Sentiment Index for the month of December will be announced in US.

NIFTY is trading below its 20-Days EMA (Exponential Moving Average) of 5953.02 and the 50-Days SMA (Simple Moving Average) of 6056.29. 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 5820 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 5780 / 5820 / 5850 levels. At the same time, 5730 / 5690 / 5650 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 37.21 and 44.55, respectively, showing a negative crossover.
2. MACD (26 Days & 12 Days): Their Values are -45.83 and -48.86, respectively. a negative crossover is indicated by both the Moving Averages.
3. +DI: 16.05, -DI: 33.69, ADX: 26.50: 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 6056.29 and 5953.02. Both the Moving Averages are showing Negative Crossover.