Nifty Weekly Outlook (10th to 14th January 2011)

From 6134.50 to 5904.60, NIFTY lost almost 229.90 points and ended in Red last week on Friday (07^th January 2011) at 5904.60 losing around 3.75% as compared to the last week’s closing of 6134.50. Last week NIFTY had a total southbound movement for all the days of the week, not a single day it ended in Green. Majority of the sectors witnessed Profit Booking and others kept weakening. METALS, IT, FERTLIZER, SUGAR, TEXTILE, AUTO, OMCs, CONSUMER DURABLES, BANKING & FINANCE, REALTY & INFRA and CAPITAL GOODS Sectors witnessed a good trading movement last week. NIFTY continuously dipped for the week and made a low of 5883.60 for the week. Last day of the week witnessed a good Selling Pressure as the fears of Interest Rate Hike gripped the markets due to Higher Food Inflation reported last week on Week on Week Basis. BANKING & FINANCE and REALTY & INFRA kept loosing in the last week too. NIFTY has made a Bearish Engulfing Pattern Candlestick, which engulfed its previous two weekly candles completely. This formation indicates that he uptrend has lost momentum and the bears may be gaining strength. NIFTY is taking a strong support of 5750 levels (on the closing basis), which if breaches then it will invite more selling pressure. Last week it closed at 5904.60. NIFTY is trading above its 40-Days EMA (Exponential Moving Average) of 5648.63 and has again breached its 20-Days EMA of 6021.51.

Last Week, Net Selling of Rs. 607.97 Crore by FIIs and of Rs. 60.63 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.

India Inc. will be coming out with its Q3 2011 Results from next week. Big Boys like, PFIZER, COROMANDEL, INFOSYSTCH, SAIL, SINTEX, CMC, HDFC, ZEEL and AXISBANK will be coming out with their Q3 2011 Results. As, Results Season and Budgets (Railway and Financial) are in the offing, investors are suggested to accumulate the BUDGET Driven Sectors Stocks like FERTILIZER, RAILWAY, METAL, CAPITAL GOODS, EDUCATION, etc.

On the Global front, in ASIA, Thailand and South Korea will make rate decisions; China is going to announce its trade data and Japan to release its core machinery orders statistics. In EUROPE, Retailers will remain in focus with Tesco, Carrefour, Sainsbury giving updates. On the economic front, ECB and Bank of England interest-rate decisions are due on Thursday. In US, market will gauge the health of the car industry with the Detroit auto show. Also, Intel's quarterly earnings report and a slate of economic data will roll out next week. 

For the next week, the levels of 5960& 6040 will act as an important resistance, whereas the levels of 5800 & 5720 will act as an important support for NIFTY.