Nifty Weekly Outlook (27th to 31st December 2010)

From 5948.75 to 6011.60, NIFTY gain merely 62.85 points and ended in green in last week ending on Friday (24th December 2010) at 6011.60 with the gain of around 1.06% as compared to the last week’s closing of 5948.75. Last week after touching the low of 5900.25, NIFTY again bounced back to the week’s high of 6011.60 and maintained at the levels of 6000 for all of the week. Last week, markets traded in a very narrow range, witnessing continuous tepid sessions. The Volume dried up all over the counters, as it was a Christmas week. It may be said that the FIIs (Foreign Institutional Investors) went off for a long holiday till New Year. Only Stock Specific and Sector Specific movement was witnessed last week, with IT, METALS, OMCs, SUGAR, TEXTILES, FERTLIZERS, TELECOM and BANKING Sectors giving the majority of movement. There was not even a single clue either domestically or globally to decide the further direction of the market. In the previous week, on the Global Platform, Moody downgraded two nations of Europe namely, Vietnam and Ireland, it also warned to further downgrade Spain. In last week, Fitch Ratings placed Greece's BBB-long-term foreign- and local-currency issuer default ratings on downgrade review, raising the possibility that Greece's sovereign rating may be cut to junk in the near future. Previous week, NIFTY made a Small White Candlestick, which closed above the previous candle’s closing, but it couldn’t cross the high made by the Candle’s in last 3-4 weeks. NIFTY is taking a strong support of 5750 levels, which if breaches the, will invite more selling pressure. Last week it managed to close at 6011.60. NIFTY is still trading above its 40-Days EMA (Exponential Moving Average) of 5609.91 and the 20-Days EMA of 5956.87.

Last Week, Net Selling of Rs. 340.17 Crore by FIIs and Net Buying of Rs. 226.86 Crore by DIIs was witnessed in the Cash Segment.

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.

On the Global front, many Asian markets will be on a shortened holiday week. A few data points and central-bank decisions will provide the only cues for traders, and action is expected to remain quiet as 2010 winds down. In US, Data on home prices, consumer confidence and jobless claims will headline an otherwise quiet week for markets will be witnessed.

For the next week, the levels of 6080 & 6150 will act as an important resistance, whereas the levels of 5850 & 5750 will act as an important support for NIFTY.