Nifty Outlook for 21st December 2010 and Pre Market Calls

Yesterday, NIFTY made a Doji Candlestick Pattern, or say a Spinning Top Candlestick Pattern on the Daily Charts, which signifies the presence of uncertainty in the markets. With the Negative Global Cues and Asian Peer Markets trading deep in the Red with the fear of Commencing of Drilling Operation by Korean Military, NIFTY had a weak opening of almost 20-25 points. Immediately, after the opening NIFTY slipped almost 50 points in the negative territory and made a low of 5900.25 for the day. At the time of closing, Asian Markets recovered from the day’s low, which helped NIFTY too to recover from day’s low. Markets traded very range bound till the opening of the European Markets and made a high of 5985 after their opening. AUTO, IT, METALS, TEXTILES, FERTILIZER and SUGAR were the star performers of the day. BANKING & FINANCE and REALTY & INFRA Stocks were again the beaten down sectors for the day. For the day, NIFTY closed at 5947.05.

Net Selling of Rs. 109.53 Crore in Cash Segment while Net Buying of Rs. 778.69 Crore in F&O Segment by FIIs was witnessed on Monday's Trading Session.

In F&O Segment Net Buying of Rs. 142.29 Crore, Rs. 341.56 Crore and of Rs. 307.67 Crore was witnessed in Index Futures, Index Options and  Stock Futures, respectively, while, Net Selling was witnessed in Stock Options of Rs. 12.84 Crore, respectively.     

NIFTY DEC FUTURE ended with the premium of 12.00 points to the Spot NIFTY.

Technically, NIFTY bounced back, but with lack of buying interest and very sluggish volumes. Yesterday, NIFTY made a high of 5985 by crossing the important resistance of 5960, but again it was not able to close above 5960 levels, which if takes place in future can again move NIFTY to the levels of 6080/6100, but at the same time, the level of 5750 is acting as a strong support which if breaches on the closing basis; NIFTY may test the levels of 5500. Now, NIFTY is again expected to touch the levels of 5850 in the short term.

On the Economic Front, in JAPAN, BoJ (Bank of Japan) will be coming out with its Interest Rate Decision and at the same time, JAPAN will be announcing its All Industry Activity for the month of October and Merchandise Trade Balance for the month of November. Gfk Consumer Confidence for the month of December and Public Sector Net Borrowing for the month of November will be announced in UK. GERMANY will be coming out with its Gfk Consumer Confidence Survey for the month of January. ABC/Washington Post Consumer Confidence will be announced in US.

NIFTY is trading below its 20-Days EMA (Exponential Moving Average) of 5938.30 and the 50-Days SMA (Simple Moving Average) of 6030.53. 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 5960 / 5990 / 6020 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 49.68 and 47.23, respectively, showing a negative crossover.
2. MACD (26 Days & 12 Days): Their Values are -27.33 and -37.63, respectively. a negative crossover is indicated by both the Moving Averages.
3. +DI: 18.19, -DI: 24.87, ADX: 25.48: 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 6030.53 and 5938.30. Both the Moving Averages are showing Negative Crossover.

Pre - Market Calls:

ROLTA   Buy only if it trades above 153 for the Targets of 156 & 158, with the strict Stop Loss of 151.50.

On Friday, ROLTA made a Bullish Harami Candlestick Pattern, which is a sign of disparity about the market’s health. This may signal a trend reversal since the second day’s small real body shows that the bearish power is diminishing. Yesterday, the stock 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 153, which if crossed will invite buying in the next trading session too. It made a high of 153 for the day. The 50-Days SMA (Simple Moving Average) and 20-Days EMA (Exponential Moving Average) are quoting at 166.18 and 156.31, respectively. The stock closed high to high at 152.10 for the day. The 14-Days RSI (Relative Strength Index) is quoting at 41.90 on the Charts (RSI below 50 indicates weakness or confirms the Selling signal). The Positive Directional Index (14.29) is still below the Negative Directional Index (28.63), ADX (Average Directional Index) has gained strength on the Intraday Charts and is quoting at 31.05 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 ROLTA only if it trades above 153 for the Targets of 156 & 157, with the strict Stop Loss of 151.50. 

AMTEKAUTO   Buy only if it trades above 145 for the Targets of 148 & 151, with the strict Stop Loss of 143.50.

On the Daily Charts, AMTEKAUTO 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 145, 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 133.49 by making a high of 143.90 and closed at 141.45. The stock’s 50-Days SMA (Simple Moving Average) is quoting at 148.36. The 14-Days RSI (Relative Strength Index) is quoting at 53.90 on the Charts (RSI below 50 indicates weakness or confirms the Selling signal). The Positive Directional Index (20.35) is above the Negative Directional Index (20.04), ADX (Average Directional Index) has gained strength and is quoting at 35.74 on the Charts. ADX’s value above 20 and near 40 indicates that the underlying trend is strengthening.  

Hence, it is recommended to buy AMTEKAUTO only if it trades above 145 for the Targets of 148 & 151, with the strict Stop Loss of 143.50.