Nifty Weekly Outlook (14th to 18th February 2011)

From 5395.75 to 5310, NIFTY lost almost 85.75 points and ended in Red last week on Friday (11^th February 2011) at 5310 losing around 1.61% as compared to the last week’s closing of 5395.75. Last week NIFTY witnessed a very choppy session with a total southbound movement in the market. Markets knocked down mainly due to lack of BUYING Interest and again Manic SELLING by the day traders and small investors. On Wednesday, markets knocked down due to a negative news flow in Anil Ambani Group Stocks (RNRL & RELINFRA) which battered the markets and the ADA Group Stocks almost 20%-25% for the day. On Friday, Markets experienced the announcement of quiet bad IIP (Index of Industrial Production)Data for the month of December. The IIP Data for the month of December was at 1.60% vs. 2.70% (MoM).   A massive selling pressure was witnessed in the REALTY & INFRA, CAPITAL GOODS, IT, TEXTILES, SUGAR, FERTILIZER, CONSUMER DURABLES, SHIPPING, AVIATION and AUTO Stocks. Even a selling pressure was witnessed from FIIs (Foreign Institutional Investors). On the last trading session, an excellent recovery was witnessed, as the market made lower lows for the first four trading session of the week. Indian Markets completely decoupled the International Markets in every way. Panic Selling mainly sentimental which 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 touched even the 38.20% Retracement Level (marked from 4538.50 to 6388 on the Daily Chart), but did not close below it, which raises the chances of a pullback in the markets, which may lead NIFTY to the levels of 5300 and 5350.  NIFTY for the week made a low of 5177.70, while a high of 5440.35, and finally closed at 5310.

Last Week, Net Selling of Rs. 2893.59 Crore by FIIs, while, Net Buying of Rs. 1708.24 Crore by DIIs was witnessed in the Cash Segment.

Technically, NIFTY has made a sort of Bullish Hammer Candlestick Pattern. If the hammer would have characterized by a close above the open thus causing a white body, the situation would have been even better for the bulls. The Bullish Hammer Candlestick Pattern requires confirmation of the implied trend reversal by a white candlestick, a large gap up or a higher close on the next trading week. This may ignite a rally as a result of covered short positions, which may then inspire the bottom pickers to take long positions. NIFTY is making Lower Highs and Lower Lows since last six weeks, which clearly signifies a good correction in the markets. NIFTY has breached its 40-Days EMA (Exponential Moving Average) of 5616.60 and is also trading much below its 20-Days EMA of 5504.62.

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, SATYAM, VIDEOIND, RAJESHEXPO, RPOWER, TATAPOWER, ISPATIND, RCOM and TATASTEEL will be coming out with their Q3 2011 Results. On International level, in France, Danonse SA, Societe General and Lafarge will be coming out with its Quarterly Results.

On the Global front, in ASIA, Japan's quarterly economic data, China's monthly inflation figures and BHP Billiton's interim results will likely take center stage in Asia over the coming week. In EUROPE, Companies such as Samsung and Sony Ericsson will unveil new products at Mobile World Congress in Barcelona next week. Meanwhile, Barclays, Danone and Nestle are due to report earnings. In US, stocks head into the new week on a positive footing, a trend that could be affected in coming days by data on retail sales, earnings news from the likes of Dell and CBS, along with further developments in Egypt's political upheaval.

For the next week, the levels of 5350 & 5450 will act as an important resistance, whereas the levels of 5200 & 5100 will act as an important support for NIFTY.