Nifty Weekly Outlook (31st January to 04th February 2011)

From 5696.50 to 5512.15, NIFTY lost almost 184.35 points and ended in Red last week on Friday (28^th January 2011) at 5512.15 losing around 3.34% as compared to the last week’s closing of 5696.50. Last week NIFTY witnessed a total sentimental, results based and data driven movement. A very choppy session was witnessed with a total southbound movement in the market. Markets faced both the Mid-Term RBI Credit Policy and Jan F&O Expiry in the same week. It was a four days trading week, out of which a massive selling was witnessed in last three days of the trading. REALTY & INFRA stocks were the hardest hit stocks. Even a selling pressure was witnessed from FIIs (Foreign Institutional Investors). Till the last two trading session, not even a single sector or say a single stock was barred from being butchered. Margin Call Off from Broking Houses and sale of Old Delivery held led to another selloff, with majority of the Index Constituents Stocks and Trading Stocks touching their 52-Week low or making a new 52-Week Low. RBI hiked both the Repo and Reverse Repo Rate by 50 BPS each and also raised the Inflation Target from 5.50% to 7.00%. Rising Inflation, FIIs Selling, Uncertainty of Government and more tightening of Credit Policy led to a confidence selloff last week in the markets last week. Indian Markets completely decoupled the International Markets in every way. Panic Selling mainly sentimental took away the markets again, fear gripped the investors and FIIs also continued their selling due to which BUYING was almost ABSENT in the markets. A brutal selloff was witnessed all over the counters, like, METALS, IT, FERTLIZER, SUGAR, TEXTILE, AUTO, OMCs, CONSUMER DURABLES, BANKING & FINANCE, REALTY & INFRA and CAPITAL GOODS Sectors. NIFTY continuously breached all its important support levels for the week by making a low of 5459.55 and closing at 5512.15.

Last Week, Net Selling of Rs. 2021.31 Crore by FIIs  and of Rs. 107.52 Crore by DIIs was witnessed in the Cash Segment.

Technically, NIFTY has made a Long Black Candlestick, which again engulfed the last week’s candle completely and even closed much lower, breaching the 40-Days EMA (Exponential Moving Average) of 5644.45 by making a low of 5459.55 but it managed to close at 5654.55. It is also trading much below its 20-Days EMA of 5762.71. Now the level of 5750, which was acting as an important support, is acting as an important resistance level.

A gloomy picture of the economy is weighing on the markets with Q3 FY11 Numbers also disappointing the Dalal Street, except the Banking Numbers. Hence, Investors are suggested to avoid making investment in the Markets right now and at the same time Traders are suggested to trade with the market trend in the markets by following Strict Stop Losses.

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.

The Results Season has commenced all over the Globe since last week. Next week, in India, DABUR, MAHSEAMLESS, NATIONALUM, INDHOTEL, DLF, SUNPHARMA, MMTC, DBREALTY, JINDALSAW, SYNDIBANK, NMDC, BEML, VOLTAS, JETAIRWAYS, SUZLON, DIVISLAB, CIPLA, BALRAMCHIN, NAGARCONST and TWL will be coming out with their Q3 2011 Results. On International level, EXXON MOBIL CORPORATION, PFIZER INC., CUMMINS INC., The McGraw-Hill Companies Inc. and The Blackstone Group will be coming out with their Quarterly Results in US. In Germany, Deutsche Bank, Munich Re Group and RE Power Systems AG will be coming out with its Quarterly Results. BT GROUP PLC, GLAXOSMITHKLINE PLC and BRITISH AIRWAYS PLC will be coming out with their Quarterly Results in UK.

On the Global front, in ASIA, Third-quarter earnings reports from Honda and Sony, as well as an interest-rate decision from Australia, China PMI and industrial output data from Japan will be the highlights of a week in which many regional markets will close for the Lunar New Year holiday.  In EUROPE, The spotlight will turn next week to the European Central Bank's monetary policy announcement and to earnings reports from BP, Shell, BBVA, Santander and Deutsche Bank. In US, Old economic concerns carry into a new month for investors, who will be watching reports on payrolls, unemployment and consumer spending. Exxon Mobil, Dell, Coca-Cola and Disney lead the earnings parade. 

For the next week, the levels of 5680 & 5780 will act as an important resistance, whereas the levels of 5400 & 5330 will act as an important support for NIFTY.