Nifty Outlook for 03rd March 2011

Yesterday, NIFTY made a Long White Candlestick Pattern. It was a strong Bull Day for the markets. NIFTY posted a Gap Up opening of almost 50 points, with AUTO and METAL Stocks registering a strong opening. Immediately after posting a strong opening, NIFTY dipped a bit and made a low of 5373.55. But it reverted swiftly from the low supported by good sales numbers of AUTO Companies. It may be said that the markets witnessed an excellent Post-Budget Rally. Greenery was witnessed all over the counters, but was not at all supported with the volume. INFRA, REAL ESTATE, IT, AUTO, FERTILIZER, BANKING, FINANCE, TEXTILE and METAL were the biggest movers of the day, which lifted NIFTY to the day’s high of 5533.05 (almost 190 points positive). Finally, for the day NIFTY registered a weak closing of 5522.30.

Net Buying of Rs. 418.51 Crore in Cash Segment and of Rs. 3290.11 Crore in F&O Segment by FIIs was witnessed on Tuesday’s Trading Session.

In F&O Segment Net Buying of Rs. 1606.41 Crore, of Rs. 1301.48 Crore and of Rs. 391.15 Crore was witnessed in Index Futures, Index Options and Stock Futures, respectively, while, Net Selling of Rs. 8.93 Crore was witnessed in Stock Options Segment.

 

NIFTY MAR FUTURE ended in a Premium of 32.65 points to the Spot NIFTY.

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. Yesterday, NIFTY closed above its 50% retracement level of 5440 at 5522.30. If NIFTY registers 2-3 consecutive closing above 50% Retracement Level, it may lift to the 68.20% Retracement Level of 5640. The other Retracement drawn from the high of 6338.50 to the low 5177.70, as drawn on the chart, it can be witnessed that NIFTY faces its resistance at 5625 (it also reverted earlier from the high of 5599.25).  NIFTY has also strongly crossed, in fact closed above its 20-Days EMA of 5449.57. 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 5600 and 5640 (on closing basis). On the other hand, the level of 5300 is acting as a Strong Support on the Closing Basis for NIFTY.

On the Economic Front, AUSTRALIA will be coming out with its Building Permits and Trade Balance for the month of January. Q4 Gross Domestic Product, Purchasing Manager Index Services for the month of February and Retail Sales for the month of January will be announced by EUROPEAN MONETARY UNION, besides this ECB (European Central Bank) will also be coming out with its Interest Rate Decision. GERMANY and UK will be coming out with their Purchasing Manager Index Services for the month of February. Initial Jobless Claims, Continuing Jobless Claims, Q4 Nonfarm Productivity and Unit Labor Costs and ISM Non-Manufacturing for the month of February 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 has crossed its 20-Days EMA of 5449.57 yesterday on the closing basis, but is still trading below 50-Days SMA and 200-Days SMA of 5669.25 and 5647.96, 5677.74 and 5644.95, 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 5550 / 5580 / 5620 levels. At the same time, 5500 / 5465 / 5420 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 51.91 and 43.08, respectively, showing a negative crossover.

2.  MACD (26 Days & 12 Days): Their Values are -64.37 and -75.96, respectively. a negative crossover is indicated by both the Moving Averages.

3.  +DI: 23.16, -DI: 21.83, ADX: 21.60: 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 5669.25       and 5449.57. Both the Moving Averages are showing Negative Crossover.