Nifty Outlook for 24th February 2011

Yesterday, NIFTY made a Bearish Gravestone Doji Candlestick Pattern. This pattern is a top reversal pattern. This Doji represents the graves of those bulls that have died defending their territory. The longer the upper shadow and the higher the price level, the more bearish the implications of the Bearish Gravestone Doji Pattern are. A confirmation is required on the following day to be more certain about the bearish implications of the Bearish Gravestone Doji Pattern. Confirmation may be in the form of the next day opening below the Gravestone Doji. The larger the gap the stronger the confirmation will be. A black candlestick with lower prices can also be another form of confirmation. NIFTY had a muted opening of almost 20-25 points in the negative territory, but immediately it moved in the positive territory, mainly led by ADA Group stocks and RELIANCE. METALS and AUTO also moved into green. A very range bound as well as choppy session was witnessed for the day. NIFTY tried to maintain the level of 5480 for whole of the day and also moved till 5495.20 (the day’s high), but could not touch 5500, as AVIATION, OMCs, REALTY & INFRA and BANKING & FINANCE were weak throughout the session, which also dragged NIFTY to the day’s low of 5427.55 in the last hour of trading. Sectors like METALS, CAPITAL GOODS, CONSUMER GOODS and TEXTILES also witnessed a sharp fall. Finally, for the day NIFTY registered a closing of 5437.35. 

Net Selling of Rs. 554.60 Crore in Cash Segment while Net Buying of Rs. 706.72 Crore in F&O Segment by FIIs was witnessed on Wednesday’s Trading Session.

In F&O Segment Net Buying of Rs. 1236.02 Crore and of Rs. 29.26 Crore was witnessed in Index Options and Stock Options, respectively, while, Net Selling of Rs. 382.26 Crore and of Rs. 176.30 Crore was witnessed in Index Futures and Stock Futures, respectively. 

 

NIFTY FEB FUTURE ended in a Premium of 3.85 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 5427.55 and closing at 5437.35. Yesterday’s closing was equal to the previous day’s low, which signals a weak trading session for the next day. If NIFTY registers 2-3 consecutive closing below 50% Retracement Level, it may drag to the 38.20% Retracement Level of 5220. NIFTY closed below its 20-Days EMA (Exponential Moving Average) of 5490.84 at 5437.35. 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 5641.55 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.

Markets may again witness a Choppy Session tomorrow, as it is the last Thursday of the month (the F&O Expiry Day).

On the Economic Front, AUSTRALIA will be coming out with its Q4 Private Capital Expenditure. National Consumer Price Index for the month of January and Tokyo Consumer Price Index for the month of February will be announced in JAPAN. GERMANY will be coming out with its Q4 Gross Domestic Product. Economic Confidence, Industrial Confidence and Consumer Confidence for the month of February will be announced by EUROPEAN MONETARY UNION. US will be coming out with its Durable Goods Order for the month of January, Initial Jobless Claims, Continuing Jobless Claims and New 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 5490.84 and is still trading below its 50-Days SMA and 200-Days SMA of 5715.45 and 5641.55, 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 5460 / 5480 / 5510 levels. At the same time, 5420 / 5375 / 5350 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 43.78 and 43.12, respectively, showing a negative crossover.

2.  MACD (26 Days & 12 Days): Their Values are -64.66 and -101.03, respectively. a negative crossover is indicated by both the Moving Averages.

3.  +DI: 19.10, -DI: 19.64, ADX: 23.93: 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 5715.45       and 5490.84. Both the Moving Averages are showing Negative Crossover.