Nifty Outlook for 14th February 2011

On Friday, NIFTY made a Long White Candlestick, with a longer lower shadow. It was a day of an excellent Short Covering. 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 breached the 38.20% level of 5220 by making a low of 5177.70 for the day. Markets witnessed a very volatile session. NIFTY had a flat opening of almost 4-5 points in the negative territory. NIFTY traded very range bound but with a Negative Bias, till the announcement of IIP (Index of Industrial Production) for the month of December. The The IIP Data for the month of December was at 1.60% vs. 2.70% (MoM), which were very low as compared to the street’s expectations. NIFTY took a deep cut after the announcement of Data, with METALS and REALTY & INFRA spooking the markets data, and made a low of 5177.70 for the day, by breaching an important physiological Support of 5200. Immediately, after making the low, NIFTY rebounded from the day’s low and turned positive, supported by Short Covering (both Intraday and of the Week). All the sectors turned Green at the end of the session, covering all their Intraday Losses and NIFTY made a high of 5319.45 for the day. For the day NIFTY finally ended in Green at 5310. The Closing above previous day’s high too, signals a pullback in the coming sessions.

Net Selling of Rs. 537.71 Crore in Cash Segment while Net Buying of Rs. 1587.48 Crore in F&O Segment by FIIs was witnessed on Friday’s Trading Session.

In F&O Segment Net Buying of Rs. 1230.46 Crore, of Rs. 254.63 Crore, of Rs. 81.37 Crore and of Rs. 21.02 Crore was witnessed in Index Futures, Index Options, Stock Futures and Stock Options, respectively.

NIFTY FEB FUTURE ended in a Premium of 7.45 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 on Friday, it even breached the 38.20% level of 5220 by making a low of 5177.70 for the day, but at the same time it managed to close above it at 5310. Yesterday, it gave a closing above the previous day’s High, signaling a pullback in the coming sessions. 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 5300 for 2-3 sessions consecutively, it may witness a pullback till the levels of 5400 and 5480. Currently, 200-Days SMA (Simple Moving Average) of 5627.11 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, CHINA will be coming out with its Trade Balance and FDI- Foreign Direct Investment for the month of December. Industrial Production for the month of December will be announced by EUROPEAN MONETARY UNION. US will be coming out with its NAHB Housing Market Index for the month of February.

Q3 2011 Results Season has commenced all over the Globe. In INDIA, COALINDIA, CRISIL, DCHL, GLAXO, GUJALKALI, ISPATIND, PARSVNATH, RELMEDIA, RPOWER, RELINFRA, RCOM, SATYAM, UNITECH and VIDEOIND 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 5504.62, 5786.64 and 5627.54, 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 5320 / 5350 / 5380 levels. At the same time, 5280 / 5250 / 5200 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 32.83 and 30.13, respectively, showing a negative crossover.

2.  MACD (26 Days & 12 Days): Their Values are -154.06 and -135.67, respectively. a negative crossover is indicated by both the Moving Averages.

3.  +DI: 11.04, -DI: 29.95, ADX: 39.28: 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 5786.64         and 5504.62. Both the Moving Averages are showing Negative Crossover.