Nifty Outlook for 10th February 2011

Yesterday, NIFTY made a Small Black Candlestick Pattern, with a longer upper shadow. At the same time, it ended below the previous day’s low too, signaling a further sell off.  An upside retracement 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 breached its 50.00% retracement level of 5433 and also even touched the 38.20% level of 5220 by making a low of 5225.65 for the day. REALTY & INFRA, POWER, METALS, TEXTILE, SHIPPING, CAPITAL GOODS and SUGAR Stocks were brutally butchered. NIFTY had a flat opening of almost 20-25 points in the negative territory and within opening it dipped almost 50-60 points. But immediately after it, NIFTY bounced back witnessing a strong covering in some of the BANKING counters and made a high of 5339.45 for the day. Markets traded very range bound till the second half of trading session, and at the same time, a negative news flow in Anil Ambani Group Stocks (RNRL & RELINFRA) battered the markets and the ADA Group Stocks almost 20%-25% for the day. Immediately after the news, markets witnessed a Sharp Recovery and again dipped to the day’s low of 5225.65. A manic selling was again witnessed in the markets. Finally, for the day NIFTY ended at 5253.55, signaling a good selloff again for the coming sessions.

Net Selling of Rs. 609.00 Crore in Cash Segment while Net Buying of Rs. 1930.47 Crore in F&O Segment by FIIs was witnessed on Wednesday’s Trading Session.

In F&O Segment Net Buying of Rs. 843.10 Crore, of Rs. 770.66 Crore, of Rs. 305.74 Crore and of Rs. 10.97 Crore was witnessed in Index Futures, Index Options, Stock Futures and Stock Options, respectively.

NIFTY FEB FUTURE ended in a Premium of 7.40 points to the Spot NIFTY.

Technically, NIFTY has completed the Retracements drawn from the level of 4920 to 6388, but has also given a closing below another larger Retracement Level 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 breached its 50.00% retracement level of 5433 earlier and yesterday it also touched the 38.20% level of 5220 by making a low of 5225.65 for the day. Yesterday, it gave a closing below the previous day’s low too, signaling a further sell off. Earlier, the 20-Days EMA (Exponential Moving Average) 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. Now if NIFTY closes above 5400 for 2-3 sessions consecutively, it may witness a pullback till the levels of 5480 and 5550. Currently, 200-Days SMA (Simple Moving Average) of 5627.37 is acting as a good resistance for NIFTY.

The way the REALTY & INFRA Stocks are crashing day-by-day and other Big Boys are also becoming weak day-by-day, it seems that Market is not in a mood to revert, but is in a mood to test a deep correction further.

On the Economic Front, AUSTRALIA will be coming out with its Consumer Inflation Expectation for the month of February, Unemployment Rate and Employment Change for the month of January. Trade Balance for the month of January will be announced in CHINA. UK will be coming out with its NIESR GDP Estimate for the month of January, Industrial Production and Manufacturing Production for the month of December and apart from all this, BoE (Bank of England) will also be coming out with its Interest Rate Decision. Initial Jobless Claims, Continuing Jobless Claims, Wholesale Inventories for the month of December and Monthly Budget Statement for the month of January will be announced in US.

Q3 2011 Results Season has commenced all over the Globe. In INDIA, BOMDYEING, CAIRN, CESC, GSPL, INDIACEM IOC, KESORAMIND, MADRASCEM, MOSERBAER and MRF will be posting their Quarterly Numbers today. In FRANCE, L Oreal SA, Renault SA and Alcatel Lucent SA will be posting their Quarterly Numbers today. In UK, Diageo PLC, Rio Tinto PLC and Rolls Royce PLC will be posting their Quarterly Numbers today. In US, Goodyear Tire and Rubber Co., Pepsi Co. Inc., Sprint Nextel Corp. and Kraft Foods Inc. will be posting their Quarterly Numbers today. 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 now trading below its 20-Days EMA (Exponential Moving Average), 50-Days SMA (Simple Moving Average) and 200-Days SMA of 5556.61, 5812.39 and 5627.37, 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 5265 / 5280 / 5320 levels. At the same time, 5225 / 5200 / 5180 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 26.02 and 30.54, respectively, showing a negative crossover.

2.  MACD (26 Days & 12 Days): Their Values are -148.58 and -123.65, respectively. a negative crossover is indicated by both the Moving Averages.

3.  +DI: 9.26, -DI: 32.75, ADX: 37.28: 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 5812.39         and 5556.61. Both the Moving Averages are showing Negative Crossover.