Nifty Outlook for 01st March 2011

Yesterday, NIFTY made a Long Doji Candlestick Pattern, with very large Upper Shadow and a short Lower Shadow. It was the Biggest Day for the Indian Financial Markets, as the Finance Minister, Mr. Pranab Mukherjee presented the Union Budget for 2011-12. NIFTY had a muted opening of almost 20-25 points in the upside. The Budget affected sectors like, FERTILIZER, EDUCATION, INFRA, AUTO and BANKING & FINANCE also opened strong in green, with the expectations. NIFTY moved almost 85 points in the positive territory during the announcement of the budget. During the Budget only, NIFTY started trading with high Volatility. Budget was more focused on Common Man and on FIIs. If any sector is considered, only INFRA Sector was more in focus. Also, Government targeted the Disinvestment of ` 40000 Cr. After the announcement of the Budget, markets reacted abnormally well and made a high of 5477 (almost 160 points) plus for the day. Majority of the sectors and stocks turned into green. NIFTY after touching day’s high of 5477 almost 5500 level, it reverted back to the day’s low of 5308.60 and all the sectors as well as stocks lost all their gains of the day. It was really the day which proved the defeat of Bulls. Finally, for the day NIFTY registered a weak closing of 5333.25.

Net Selling of Rs. 39.86 Crore in Cash Segment while Net Buying of Rs. 1816.42 Crore in F&O Segment by FIIs was witnessed on Monday’s Trading Session.

In F&O Segment Net Buying of Rs. 1104.53 Crore, of Rs. 233.30 Crore, of Rs. 472.05 Crore and of Rs. 6.54 Crore was witnessed in Index Futures, Index Options, Stock Futures and Stock Options, respectively. 

 

NIFTY MAR FUTURE ended in a Premium of 9.80 points to the Spot NIFTY.

Technically, NIFTY has once completed the Retracements drawn from the low made on 03^rd November, 2009 of 4538.50 to the high made on 05^th November, 2010 of 6388.50, as drawn on the chart, it can be witnessed that NIFTY completed its retracement fully, and has again reverted. Yesterday, NIFTY tried to cross its after 50% retracement level of 5440 by making a high of 5477, but could only touch it as it closed at 5333.25 for the day, hence it closed below the 50% Retracement Level. If NIFTY registers 2-3 consecutive closing below 50% Retracement Level, it may drag to the 38.20% Retracement Level of 5220. NIFTY also tried to touch its 20-Days EMA of 5441.91, but could not cross it on the closing basis. Earlier, the 20-Days EMA crossed the 50-Days SMA (Simple Moving Average) from upside and the Negative Crossover of 20-Days EMA over the 200-Days SMA from reflects more selling pressure in the coming sessions. Even, the 50-Days SMA is now signaling a negative crossover to be formed in the coming days by crossing 500-Days SMA from upside. Now, the NIFTY may witness a pullback till the levels of 5400 and 5465 (on closing basis). On the other hand, the level of 5200 is acting as a Strong Support on the Closing Basis for NIFTY.

On the Economic Front, AUSTRALIA will be coming out with its Q4 Current Account Balance and Retail Sales for the month of January. Manufacturing PMI for the month of February will be announced in CHINA. JAPAN will be coming out with its Labor Cash Earnings for the month of January, Monetary Base and Vehicle Sales for the month of February. Nationwide Housing Prices for the month of February, M4 Money Supply, Net Lending to Individuals and Mortgage Approvals for the month of January and Purchasing Manager Index for the month of February will be announced in UK. GERMANY will be coming out with its Unemployment Rate and Unemployment Change for the month of February. Purchasing Manager Index Manufacturing for the month of February and Unemployment Rate for the month of January will be announced by EUROPEAN MONETARY UNION. US will be coming out with its Construction Spending for the month of January, ISM Manufacturing, ISM Prices Paid and Total Vehicle Sales for the month of February.

Traders are suggested to trade cautiously by following Strict Stop Losses and Booking Fast Profits, whereas, Investors are suggested to avoid making Fresh Investments at this point of time in the Markets.

NIFTY is still trading below its 20-Days EMA, 50-Days SMA and 200-Days SMA of 5441.91, 5677.74 and 5644.95, respectively. Both the Moving Averages have again given a Negative Crossover, as Short Term Moving average has crossed the Long Term Moving Average from upside to the southward direction. MACD (Moving Average Convergence Divergence) and RSI (Relative Strength Index) have again turned southbound, signaling a bit of more selling pressure to come in. 

For the day, intraday resistance for NIFTY comes at 5350 / 5380 / 5420 levels. At the same time, 5300 / 5275 / 5240 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 40.54 and 40.87, respectively, showing a negative crossover.

2.  MACD (26 Days & 12 Days): Their Values are -80.21 and -80.99, respectively. a negative crossover is indicated by both the Moving Averages.

3.  +DI: 22.51, -DI: 24.75, ADX: 23.03: The Negative Directional Index has gained strength over the Positive 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 5677.74       and 5441.91. Both the Moving Averages are showing Negative Crossover.