Nifty Weekly Outlook (07th to 11th February 2011)

From 5512.15 to 5395.75, NIFTY lost almost 116.40 points and ended in Red last week on Friday (04^th February 2011) at 5395.75 losing around 2.16% as compared to the last week’s closing of 551.15. Last week NIFTY witnessed a total sentimental, and news driven movement. A very choppy session was witnessed with a total southbound movement in the market. Markets knocked down due to Geopolitical Tensions in Egypt, which led to hike in Crude Prices. A massive selling was witnessed in the REALTY & INFRA, CAPITAL GOODS, IT, TEXTILES, CONSUMER DURABLES, SHIPPING, AVIATION and AUTO Stocks. Even a selling pressure was witnessed from FIIs (Foreign Institutional Investors). Till the last two trading session, not even a single sector or say a single stock was barred from being butchered. Margin Call Off from Broking Houses and sale of Old Delivery held led to another selloff. Rising Inflation, FIIs Selling, Uncertainty of Government and more tightening of Credit Policy led to a confidence selloff last week in the markets last week. Indian Markets completely decoupled the International Markets in every way. Panic Selling mainly sentimental took away the markets again, fear gripped the investors and FIIs also continued their selling due to which BUYING was almost ABSENT in the markets. Last week, NIFTY continuously kept closing below its 50% Retracement Level (marked from 4920 to 6388 on the Daily Chart), which raised the chances of touching its 38.2% level (5380) too. Hence, after breaching an important psychological level of 5400, NIFTY closed at 5395.75. NIFTY for the week made a low of 5369.05.

Last Week, Net Selling of Rs. 1356.16 Crore by FIIs, while, Net Buying of Rs. 2510.92 Crore by DIIs was witnessed in the Cash Segment.

Technically, NIFTY has made a sort of Bullish Inverted Hammer Candlestick Pattern. If the next week opens above the real body of the inverted hammer, it means that those who shorted at the opening or closing of the inverted hammer week are losing money. The longer the market holds above the inverted hammer’s real body, the more likely these shorts will attempt to cover their positions. This may ignite a rally as a result of covered short positions, which may then inspire the bottom pickers to take long positions. NIFTY breached its 40-Days EMA (Exponential Moving Average) of 5632 by making a low of 5369.05 but it managed to close at 5395.75. It is also trading much below its 20-Days EMA of 5641. Now the level of 5750, which was acting as an 

important support, is acting as an important resistance level.

A gloomy picture of the economy is weighing on the markets with Q3 FY11 Numbers also disappointing the Dalal Street, except the Banking Numbers. Hence, Investors are suggested to avoid making investment in the Markets right now and at the same time Traders are suggested to trade with the market trend in the markets by following Strict Stop Losses. 

The Results Season has commenced all over the Globe since last week. Next week, in India, ANATRAJIND, BAJAJHIND, BFUTILITIES, INGERSOLL RAND, PUNJLLOYD, LITL, MUNDRAPORT, NAGARFERT, HOCL, BEML, HANUNG, RCF, EVERONN, PTC INDIA, FINOLEX CABLES, PIDILITEIND, ADANIPOWER, M&M, PATNI, BRITANNIA, BPCL, KRBL, RECLTD, ORBITCORP, GMRINFRA, FCS, BRFL, STINDIA, ABGSHIP, BOMDYEING, MRF, IOC, CAIRN, GSPL, BGRENERGY, CESC, CUB, MOSERBAER, KESORAM, PRAKASHIND, INDIACEM, MTNL, EDUCOMP, APOLLOHOSP, COREPROJECTS, TNPL, PIRHEALTH, GAMMNINFRA, HDIL, KSOILS, PATELENG and ABAN will be coming out with their Q3 2011 Results. On International level, Cognizant Technology Solutions Corp, Mc Donald’s Corp, Sara Lee Corp, Walt Disney Co., The Coca Cola Co., Metlife Inc., Cisco Systems Inc., Goodyear Tire and Rubber Co., Pepsi Inc., Sprint Nextel Corp. and Kraft Foods Inc. will be coming out with their Quarterly Results in US. In France, Peugeot SA, Sanofi Aventis SA, AIR France-KLM, L Oreal SA, Renault SA and Alcatel Lucent SA will be coming out with its Quarterly Results. Diageo PLC, Rio Tinto PLC and Rolls Royce Group PLC will be coming out with their Quarterly Results in UK

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On the Global front, in ASIA, Earnings reports from Toyota, Nissan and Rio Tinto will be in the spotlight, and also the core machinery orders from Japan and a rate decision from South Korea. India will also be coming out with the IIP (Index of Industrial Production) Data for the month of December. In EUROPE, Swiss banking giants UBS AG and Credit Suisse Group AG are due to report quarterly earnings next week. The Bank of England is expected to leave monetary policy unchanged. In US, With the Dow and S&P above psychologically important levels, a lean slate of data along with earnings from insurers and REITs could propel stocks from their current perches.

For the next week, the levels of 5625 & 5720 will act as an important resistance, whereas the levels of 5300 & 5230 will act as an important support for NIFTY.