Nifty Weekly Outlook (20th to 24th December 2010)

From 5857.35 to 5948.75, NIFTY gain merely 91.40 points and ended in green in last week ending on Friday (16th December 2010) at 5948.75 with the loss of around 1.56% as compared to the last week’s closing of 5857.35. Last week after touching the low of 5795.90, NIFTY again bounced back to the week’s high of 5956.15 and maintained at the levels of 5950 for all of the week. Again, the last week was quiet eventful for the markets. Domestically, two major Economic Data namely, Monthly Inflation Data and RBI’s (Reserve Bank of India’s) Mid-Term Credit Policy Review were announced. The Monthly Inflation Data were better than expectation at 7.48% Vs 8.58% (MoM) as well as RBI’s Mid-Term Monthly Review was in line with market expectations, RBI announced to the SLR (Statutory Liquidity Ratio) to 24% from 25%. On the Global Platform, Moody’s again downgraded two nations of Europe namely, Vietnam and Ireland, it also warned to further downgrade Spain. NIFTY traded in a very narrow range in last week and remain very sluggish with low delivery and trading volumes. IT Sector was the Star Performer last week. Other than this, CEMENT, FERTILIZER, SUGAR, AIRWAYS and METAL Sectors gave a good trading momentum. Previous week, NIFTY made a Bearish Dark Cloud Cover Candlestick Pattern, the confirmation of which could be proved by the formation of a black candlestick, a large gap down or a lower close the next week. Last week, NIFTY had a closing below its previous week. NIFTY is taking a strong support of 5750 levels, which it is testing since last four weeks or say last one month. Last week it managed to close at 5948.75. NIFTY if breaches the levels of 5750, will invite more selling pressure. NIFTY is approaching slowly and slowly towards its 40-Days EMA (Exponential Moving Average) of 5589.31 and has breached the 20-Days EMA of 5937.38.

If a look at International Markets is taken, majority of the Asian Indices have retraced back from their important resistance levels after touching them, raising the expectation of more of a correction in next coming weeks. On the flip side, both the European and American Indices have crossed their important resistance levels and have become bullish for the next week. Keeping in mind the ongoing uncertain economic and financial environment domestically, traders are suggested to trade cautiously by following Strict Stop Losses and avoid making fresh investments at this point of time.

Last Week, Net Selling of Rs. 658.64 Crore by FIIs and Net Buying of Rs. 681.94 Crore by DIIs was witnessed in the Cash Segment.

On the Global front, in Asia, a full slate of economic news is set to come from JAPAN - including the monetary policy decision and monthly trade data. In Europe, Greek budget and Bank of England minutes are in focus. In US, Revised GDP figures, jobs and durables reports are due in next week.  

For the next week, the levels of 6040 & 6150 will act as an important resistance, whereas the levels of 5750 & 5650 will act as an important support for NIFTY.