Nifty Outlook for 25th February 2011

Yesterday, NIFTY made a Long Black Candlestick Pattern, with a Gap down opening of almost 30 points. As mentioned in the earlier report, NIFTY confirmed the formation of the Bearish Gravestone Doji Pattern. It was a bloodbath scene in the markets. NIFTY continued to trade southwards, since starting of the session, with BANKING & FINANCE, METAL and AUTO tripping lower for the day. It was really the day which proved the defeat of Bulls. After witnessing a gap down too, NIFTY recovered a bit but could only reach till 5423.40 for the day, which was acting as an important support till yesterday. After touching day’s high, NIFTY again dipped below 5400, which created panic in the mind of day traders too. It can be said that due to Libyan unrest NIFTY continued to spite and lost nearly 3% for the day.  Hour by hour NIFTY tripped its intraday supports and breached even the levels of 5350, 5320 and 5300 too. Sectors like REALTY & INFRA, BANKING & FINANCE, AVIATION, AUTO, METAL, SHIPPING, CAPITAL GOODS, PHARMA, OIL & GAS, POWER, IT and CONSUMER GOODS were butchered badly. It was a record volume for the Indian markets, especially on expiry day. Total traded turnover was at ` 2,99,194.72 crore, including ` 2,77,277.49 crore from the F&O segment. Not even a bit of intraday recovery was witnessed in the markets. NIFTY tanked almost 190 points for the day and made a low of 5242.50. Finally, for the day NIFTY registered a weak closing of 5262.70. 

Net Selling of Rs. 2702.22 Crore in Cash Segment and of Rs. 4823.84 Crore in F&O Segment by FIIs was witnessed on Thursday’s Trading Session.

In F&O Segment Net Buying of Rs. 32.30 Crore in Stock Options, while, Net Selling of Rs. 496.62 Crore, of Rs. 4073.94 Crore and of Rs. 285.59 Crore was witnessed in Index Futures, Index Options and Stock Futures, respectively.

Technically, NIFTY has once 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. Day before Yesterday, after closing below the 50% retracement level of 5440, yesterday, NIFTY also almost touched the 38.20% Retracement level of 5225 by making a low of 5242.50 and closing at 5262.70. Yesterday’s closing has almost shattered the hope of Pre-Budget Rally among the investors. If NIFTY registers 2-3 consecutive closing below 50% Retracement Level, it may drag to the 38.20% Retracement Level of 5220. 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. Even, the 50-Days SMA is now signaling a negative crossover to be formed in the coming days by crossing 500-Days SMA from upside. Now, the NIFTY may witness a pullback till the levels of 5400 and 5465 (on closing basis). On the other hand, the level of 5200 is acting as a Strong Support on the Closing Basis for NIFTY.

Ms. Mamta Banerjee will be presenting the Rail Budget for 2011-12 at around 11:00 p.m., hence, markets will be witnessing the movement accordingly.

On the Economic Front, UK will be coming out with its Gfk Consumer Confidence for the month of February, Q4 Gross Domestic Product, Q4 Total Business Investment and Index of Services for the month of December. Consumer Price Index for the month of February will be announced in GERMANY. EUROPEAN MONETARY UNION will be coming out with its M3 Money Supply for the month of January. Q4 Gross Domestic Product, Q4 Real Personal Consumption Expenditure and Reuters/Michigan Consumer Sentiment Index will be announced in US.

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 5469.12, 5701.83 and 5642.20, 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 5285 / 5320 / 5350 levels. At the same time, 5240 / 5200 / 5170 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 35.46 and 41.59, respectively, showing a negative crossover.

2.  MACD (26 Days & 12 Days): Their Values are -75.58 and -92.31, respectively. a negative crossover is indicated by both the Moving Averages.

3.  +DI: 16.70, -DI: 29.09, ADX: 24.16: 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 5701.83       and 5469.12. Both the Moving Averages are showing Negative Crossover.