Nifty Outlook for 14th December 2010 and Pre Market Call

Yesterday, NIFTY made a White Candlestick with a longer lower shadow, which indicates that the market bounced back from the day’s low and closed near day’s high. The Candlestick formed is a Bullish Hammer Candlestick, the relevance of which is more in the downtrend. It was a very volatile session, NIFTY opened very flat with all the Index constituents in Green. A sudden dip in the markets was witnessed, which dragged NIFTY to the day’s low of 5795.90. A selloff was witnessed in BANKING & FINANCE, AUTO, CEMENT, FERTILIZERS and METALS Sectors specifically, but it was all over the counter. The stocks turned from day’s high to the day’s low. NIFTY traded very range bound till the second half of trading session and again spurted to day’s high to the levels of 5913.80. A good bounce was again witnessed in majority of the Index Constituents and METALS Stocks. For the day, NIFTY ended at 5907.65 levels.

Net Selling of Rs. 287.77 Crore in Cash Segment by FIIs was witnessed on Friday's Trading Session.

NIFTY DEC FUTURE ended at the same level as the Spot NIFTY. 

Technically, an expected bounce back was witnessed in NIFTY witnessed a bounce back with lack of buying interest. The level of 5750 is acting as a strong support which if breaches again on the closing basis; NIFTY may test the levels of 5500.

On the Economic Front, JAPAN will be coming out with its Industrial Production and Capacity Utilization for the month of October, Q4 Tankan Large Manufacturing Index, Q4 Tankan Large All Industry Capex, Q4 Tankan Large Manufacturing Outlook, Q4 Tankan Non-Manufacturing Index, Q4 Tankan Non-Manufacturing Outlook, and Tertiary Industry Index for the month of October. Q3 Housing Starts, Westpec Consumer Confidence for the month of December and National Australia Bank’s Business Confidence for the month of November will be announced in AUSTRALIA.   UK will be coming out with its RICS House Price Balance, Consumer Price Index, Retail Price Index for the month of November and DCLG House Price Index for the month of October. Industrial Production for the month of October will be announced by EUROPEAN MONETARY UNION. GERMANY will be coming out with its ZEW Survey – Current Situation and ZEW – Economic Sentiment for the month of December. Producer Price Index and Retail Sales for the month of November, Business Inventories for the month of October and ABC/Washington Post Consumer Confidence for the month of December will be announced in US. Apart from all this, US Federal Reserve will be coming out with its Interest Rate Decision too.  

NIFTY is trading below its 20-Days EMA (Exponential Moving Average) of 5940.46 and the 50-Days SMA (Simple Moving Average) of 6048.12. 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 5720 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 / 5950 / 5980 levels. At the same time, 5880 / 5840 / 5800 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 46.90 and 44.88, respectively, showing a negative crossover.
2. MACD (26 Days & 12 Days): Their Values are -44.46 and -43.67, respectively. a negative crossover is indicated by both the Moving Averages.
3. +DI: 16.55, -DI: 29.53, ADX: 27.34: 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 6048.12 and 5940.46. Both the Moving Averages are showing Negative Crossover.

Pre - Market Call:

PETRONET   Buy only if it trades above 124.50 for the Targets of 128 & 130, with the strict Stop Loss of 123.

On the Daily Charts, PETRONET has made a White Opening Marubozu Candlestick, with a good spurt in volume. The prices crossed their 50-Days SMA (Simple Moving Average) and 20-Days EMA (Exponential Moving Average) of 118.49 and 119.32, respectively, by making a high of 124.40 for the day and closing at 123.75. The prices are facing a strong resistance at the levels of 124, which if crossed, will again move the stock to its life time high. The 14-Days RSI (Relative Strength Index) is quoting at 56.60 on the Charts (RSI below 50 indicates weakness or confirms the Selling signal). The Positive Directional Index (17.04) is below the Negative Directional Index (20.91), ADX (Average Directional Index) has gained strength on the Intraday Charts and is quoting at 15.15 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 PETRONET only if it trades above 124.50 for the Targets of 128 & 130, with the strict Stop Loss of 123.