Nifty Outlook for 21st February 2011

On Friday, NIFTY made a Long Black Candlestick Pattern, with a longer higher shadow.  NIFTY had a muted opening of almost 15-20 points in the positive territory with majority of the Index Constituents strongly opening (almost 2%-2.5% plus). A run up for the other Crucial Resistance of 5600, moved NIFTY to the day’s high of 5599.25 (almost 45-50 points in the positive territory). Immediately, after touching the day’s high, NIFTY swiftly slipped and dipped almost 35-40 points in red and tested the important support of 5500 for almost 2-2.5 hours of the trading session. For whole of the trading session, NIFTY FUTURE continuously traded in discount. In the last hour of trading session, after the news flow of inquiry of Mr. Anil Ambani regarding 2-G Scam, NIFTY breached its important support of 5500 and dipped to the day’s low of 5441.95, breaching another crucial support of 5450. BANKING & FINANCE, REALTY & INFRA, SHIPPING, TEXTILE, METALS, CAPITAL GOODS, AUTO, IT and CONSUMER GOODS all dipped, led mainly by the ADA Group Stocks. The volume for the day was a bit better if compared to the other trading sessions of the week. Finally, for the day NIFTY registered a weak closing of 5458.95.

Net Buying of Rs. 207.67 Crore in Cash Segment and of Rs. 1260.27 Crore in F&O Segment by FIIs was witnessed on Friday’s Trading Session.

In F&O Segment Net Buying of Rs. 324.03 Crore, of Rs. 617.98 Crore and of Rs. 347.18 Crore was witnessed in Index Futures, Index Options and Stock Futures, respectively, while,  Net Selling of Rs. 28.92 Crore was witnessed in Stock Options.

 

NIFTY FEB FUTURE ended in a Premium of 7.05 points to the Spot NIFTY.

 

Technically, NIFTY has 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. On Friday, it again closed above the 50% retracement level of 5440 at 5458.95. NIFTY opened at important resistance of 5560 and tried to cross the other crucial resistance of 5600, but could only touch it by making a high of 5599.25. On the last trading session, the candle has engulfed the last three candles completely into it and gave a closing just above the robust closing of Monday (5456), and created a panic by making a low of the day (5441.95). Even NIFTY again closed below its 20-Days EMA (Exponential Moving Average) of 5497.32 at 5458.95. 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. Now, the NIFTY may witness a pullback till the levels of 5550 and 5600 (on closing basis). Currently, 200-Days SMA (Simple Moving Average) of 5635.46 is acting as a good resistance for NIFTY. On the other hand, the level of 5400 is acting as a Strong Support on the Closing Basis for NIFTY.

On the Economic Front, JAPAN will be coming out with its All Industry Activity Index for the month of December. Rightmove House Price Index for the month of February will be announced in UK. GERMANY will be coming out with its Purchasing Manager Index Services, Purchasing Manager Index Manufacturing, IFO – Business Climate, IFO – Current Assessment and IFO – Expectations for the month of February. Purchasing Manager Index Services and Purchasing Manager Index Manufacturing will be announced by EUROPEAN MONETARY UNION.   

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 5497.32, 5737.58 and 5636.78, 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 5480 / 5520 / 5550 levels. At the same time, 5420 / 5375 / 5340 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 44.54 and 40.76, respectively, showing a negative crossover.

2.  MACD (26 Days & 12 Days): Their Values are -85.11 and -127.53, respectively. a negative crossover is indicated by both the Moving Averages.

3.  +DI: 22.87, -DI: 20.68, ADX: 29.71: 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 5737.58         and 5497.32. Both the Moving Averages are showing Negative Crossover.