Nifty Outlook for 23rd February 2011

Yesterday, NIFTY made a Small Black Candlestick Pattern. NIFTY had a muted opening of almost 20-25 points in the negative territory, but immediately it dipped 50 points, due to selling off of the stocks across the Asian region on worries about raging political tensions in the Mideast and North Africa. The selloff was witnessed all over the Globe, day before yesterday in EUROPEAN Region too. Also  Moody's Investors Service cut its outlook on the Japanese government's Aa2 rating to negative from stable, after the downgrading of Libya by Fitch Ratings and of Bahrain by Standard & Poor’s. Due to raging political tensions, Crude spiked up which led to more sell off in Interest Rate Sensitive Stocks, like, REALTY & INFRA, BANKING & FINANCE and AUTO. AVIATION and OMCs also took a deep cut. RELIANCE was bucking the trend due to the Deal signed with BP. NIFTY traded in red for whole of the session. It tried to cover thrice in intraday but could not succeed due to manic selling pressure. NIFTY opened at 5504.40 and dipped till 5465 after the first selling pressure, it tried to maintain this level and touch 5500 again, but in last hour of the session, with the weakness in the European Markets, NIFTY breached this support and made a low of 5437.30 for the day. Selling was witnessed in all the counters and sectors of the market. Finally, for the day NIFTY registered a closing of 5469.20. 

Net Selling of Rs. 386.26 Crore in Cash Segment and of Rs. 1968.53 Crore in F&O Segment by FIIs was witnessed on Tuesday’s Trading Session.

In F&O Segment Net Buying of Rs. 6.23 Crore in Stock Options, while, Net Selling of Rs. 1128.95 Crore, of Rs. 792.27 Crore and of Rs. 53.54 Crore was witnessed in Index Futures, Index Options and Stock Futures, respectively. 

 

NIFTY FEB FUTURE ended in a Premium of 1.15 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. Yesterday, it again breached the 50% retracement level of 5440 by making a low of 5437.30, but maintained to close above it at 5469.20. It seems that NIFTY has got stuck to this 50% Retracement Level and is still undecided of its further move. NIFTY closed below its 20-Days EMA (Exponential Moving Average) of 5496.48 at 5469.20. 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 Corporate Service Price and Merchandise Trade Balance for the month of January. Q4 Construction Work Done and Wage Price Index will be announced in AUSTRALIA. UK will be coming out with BoE’s (Bank of England’s) Minutes and BBA Mortgage Approvals for the month of January. Industrial New Orders for the month of December will be announced by EUROPEAN MONETARY UNION. US will be coming out with its MBA Mortgage Applications and Existing Home Sales for the month of January.

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 has again closed below its 20-Days EMA of 5496.48 and is still trading below its 50-Days SMA and 200-Days SMA of 5724.86 and 5640.26, 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 5500 / 5530 / 5550 levels. At the same time, 5430 / 5400 / 5375 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 45.59 and 42.96, respectively, showing a negative crossover.

2.  MACD (26 Days & 12 Days): Their Values are -67.57 and -111.22, respectively. a negative crossover is indicated by both the Moving Averages.

3.  +DI: 20.02, -DI: 19.89, ADX: 25.67: 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 5724.86 and 5496.48. Both the Moving Averages are showing Negative Crossover.