Nifty Outlook for 15th December 2010 and Pre Market Calls

On the Daily Chart, NIFTY has made higher highs and higher lows with High Wave Candlestick Pattern in last two days with longer lower shadow, which signals that the buying is seen at lower levels. But if a look at yesterday’s Candle is taken it suggests that the Market is waiting for a clue for its further direction. However, a group of high wave candlesticks signal a possible reversal in the market. It was a very volatile session, NIFTY opened very flat with majority of the Index constituents in Red. A sudden dip in the markets was witnessed, which dragged NIFTY to the day’s low of 5795.90. High volatility with good trading momentum was witnessed in FINANCE, FERTILIZER, OMCs, METALS and SUGAR Stocks. Markets traded in a very narrow range with volatility throughout the trading session. NIFTY for the day made a high of 5953.95, while a low of 5888.75. For the day, NIFTY ended in Green at 5944.10 levels, on the positive note that Inflation levels fell to its 11-month low at 7.48%.

Net Buying of Rs. 33.53 Crore in Cash Segment and Net Selling of Rs. 1272.29 Crore in F&O Segment by FIIs was witnessed on Tuesday's Trading Session.

In F&O Segment Net Buying was witnessed of Rs. 744.90 Crore in Index Futures, while, Net Selling was witnessed in Index Options, Stock Futures and Stock Options Segment of Rs. 1743.95 Crore, Rs. 255.61 Crore and Rs. 17.63 Crore, respectively.     

NIFTY DEC FUTURE ended with the premium of 14.90 points to 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, CHINA will be coming out with its M2 Money Supply for the month of November. New Motor Vehicle Sales for the month of November will be announced in AUSTRALIA. UK will be coming out with its Jobless Claims Change and Claimant Count Rate for the month of November, Average Earnings and ILO Unemployment Rate for the month of October. Q3 Employment Change will be announced in EUROPEAN MONETARY UNION. US will be coming out with its Total Net TIC Flows and Net Long-term TIC Flows for the month of October, Consumer Price Index, Industrial Production and Capacity Utilization for the month of November, MBA Mortgage Applications, NY Empire State Manufacturing Index and NAHB Housing Market Index for the month of December. From tomorrow, India Inc. will also be coming out with its Advance Tax Numbers for the Third Quarter.

NIFTY is trading below its 20-Days EMA (Exponential Moving Average) of 5940.80 and the 50-Days SMA (Simple Moving Average) of 6043.82. 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 5980 / 6020 / 6050 levels. At the same time, 5920 / 5880 / 5850 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 49.19 and 45.74, respectively, showing a negative crossover.
2. MACD (26 Days & 12 Days): Their Values are -38.57 and -41.13, respectively. a negative crossover is indicated by both the Moving Averages.
3. +DI: 18.48, -DI: 28.27, ADX: 26.88: 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 6043.82 and 5940.80. Both the Moving Averages are showing Negative Crossover.

Pre - Market Calls:

GSPL   Buy only if it trades above 120 for the Targets of 123 & 124, with the strict Stop Loss of 118.

On the Daily Charts, GSPL has made a Long White Candlestick, with a good spurt in volume. The stock had a positive movement for whole of the trading session. The stock is facing Strong Resistance at the levels of 120, which if crossed will invite buying in the next trading session too. Yesterday, the stock crossed its 50-Days SMA (Simple Moving Average) and 20-Days EMA (Exponential Moving Average) of 115.73 and 113.19, respectively by opening at 114.80 and making a high of 119.90 for the day. The stock closed high to high at 119.55 for the day. The 14-Days RSI (Relative Strength Index) is quoting at 58.59 on the Charts (RSI below 50 indicates weakness or confirms the Selling signal). The Positive Directional Index (22.11) is above the Negative Directional Index (20.06), ADX (Average Directional Index) has gained strength on the Intraday Charts and is quoting at 19.05 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 GSPL only if it trades above 120 for the Targets of 123 & 124, with the strict Stop Loss of 118. 

TATACHEM   Buy only if it trades above 375 for the Targets of 382 & 385, with the strict Stop Loss of 370.

On the Daily Charts, TATACHEM has made a Large White Candlestick, with a slight spurt in volume. The stock maintained its upside of the day for whole of the trading session very firmly. The prices are facing strong resistance at the levels of 375, which if crossed will invite buying in the next trading session too. For the day, the stock moved above its 20-Days EMA (Exponential Moving Average) of 368.51 by making a high of 374 and closed at 373.15. The stock’s 50-Days SMA (Simple Moving Average) is quoting at 394.92. The 14-Days RSI (Relative Strength Index) is quoting at 49.91 on the Charts (RSI below 50 indicates weakness or confirms the Selling signal). The Positive Directional Index (14.55) is still below the Negative Directional Index (24.77), ADX (Average Directional Index) has gained strength and is quoting at 35.04 on the Charts. ADX’s value above 20 and near 40 indicates that the underlying trend is strengthening.  

Hence, it is recommended to buy TATACHEM only if it trades above 375 for the Targets of 382 & 385, with the strict Stop Loss of 370.