Nifty Outlook for 10th March 2011

Yesterday, NIFTY made a Doji Candlestick Pattern with a longer lower shadow, which shows an indecision in the markets.  NIFTY witnessed a muted Opening of almost 26 points in green. Markets witnessed a rally of almost 30 points due to a bit of cool off in prices of Crude. It was a very skittish session for the market, NIFTY traded with full volatility even being sticking to a narrow range. Sectors like, IT, REALTY, BANKING, TEXTILE, AVIATION, OMCs, METAL and MINING witnessed a highly volatile session. In the mid of the session NIFTY made a low of 5477.45 (which was also 30 points down). A bit of value buying was also witnessed in some of the stocks. ADA Group Stocks were the star performers of the day. Markets were majorly buoyed by Crude Prices and Rising Dollar. Stocks which took a deep cut the day before, witnessed a good comeback, signaling an instant Short Covering in them. Finally, for the day NIFTY posted a closing of 5531.

Net Buying of Rs. 131.17 Crore in Cash Segment while Net Selling of Rs. 299.58 Crore in F&O Segment by FIIs was witnessed on Wednesday’s Trading Session.

In F&O Segment Net Buying of Rs. 93.50 Crore and of Rs. 31.97 Crore was witnessed in Index Futures and Stock Futures, while, Net Selling of Rs. 374.86 Crore and of Rs. 61.23 Crore and of Rs. 50.19 Crore was witnessed in Index Options and Stock Options Segment, respectively.

 

NIFTY MAR FUTURE ended in a Premium of 1.00 points to the Spot NIFTY.

 

Technically, NIFTY is trading below the Retracements 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 5620 (it also reverted earlier from the high of 5599.25), the 61.80% Retracement Level. It can be witnessed in the Chart that NIFTY is maintaining very well above the upper trendline. Another channel formation can be witnessed on the charts, when a trendline is dropped from the high of 5556.30 made on 04^th February, 2011 to the higher highs made later on and the lower trendline drawn from the low of 5177.70 made on 11^th February, 2011 to the higher lows made consecutively. 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 reflects more selling pressure in the coming sessions. Even, the 50-Days SMA has signaled a negative crossover by crossing 500-Days SMA from upside, hence showing more selling pressure to creep in. Now, the NIFTY may witness a pullback till the levels of 5580 and 5620. On the other hand, the level of 5400 is acting as a Strong Support on the Closing Basis for NIFTY.

On the Economic Front, CHINA will be coming out with its FDI – Foreign Direct Investment, M2 Money Supply and Trade Balance for the month of February. Machine Tool Orders for the month of February will be announced in JAPAN. GERMANY will be coming out with its Trade Balance and Current Account for the month of January. Industrial Production and Manufacturing Production for the month of January will be announced in UK, apart from the BoE (Bank of England) Interest Rate Decision for the month of March. US will be coming out with its Initial Jobless Claims, Continuing Jobless Claims, Trade Balance for the month of January and Monthly Budget Statement for the month of February.

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 trading well above its 20-Days EMA of 5476.34, but on the other hand, is still below the 50-Days SMA and 200-Days SMA of 5621.55 and 5663.18, respectively. MACD (Moving Average Convergence Divergence) is still signaling a bit of more selling pressure to come in, but at the same time, RSI (Relative Strength Index) has turned northbound. 

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 52.25 and 48.72, respectively, showing a negative crossover.

2.  MACD (26 Days & 12 Days): Their Values are -19.14 and -52.06, respectively. a negative crossover is indicated by both the Moving Averages.

3.  +DI: 25.2924.55, -DI: 22.5623.86, ADX: 16.79: 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 5621.55 and 5476.34. Both the Moving Averages are showing Negative Crossover.