Nifty Outlook for 14th March 2011

On Friday, NIFTY made a Bullish Long Legged Doji Candlestick Pattern, which shows that there is a great deal of confusion and indecision in the market. This particular pattern shows that the prices moved well above and below the day's opening level, however they finally closed virtually at the same level with the opening price. The end result is only a little change from the opening price despite the whole volatility and excitement during the day that clearly reflects that the market lost its sense of direction. This Candlestick Formation requires a confirmation in the form of a move opposite to the prior trade on the next trading day. NIFTY witnessed a Gap Down Opening of almost 40 points and immediately slipped more into red, dragged particularly by METAL, BANKING, FINANCE, TEXTILE and MINING. Just before the announcement of the January IIP (Index of Industrial Production) Data market bounced back again and made a high of 5502.70. The January 2011 IIP Data were better than markets’ expectations on Monthly Basis, but at the same time were poor on Yearly Basis. The January IIP Numbers were at 3.70% Vs 1.60% (MoM Basis) and April-January IIP Numbers were at 8.30% Vs 9.50% (YoY Basis). Immediately after the announcement of IIP Numbers, NIFTY again dipped to the low, this time was particularly dragged by CAPITAL GOODS Stocks. In a while, the news flow of powerful Earthquake and Tsunami in Northern Japan also led to tremors in Dalal Street, consecutively, NIFTY made a low of 5411.55 (down by almost 90 points). Selling Pressure was dominating the financial markets all over the globe, as it was the biggest Natural Disaster in Japan, since last 140 years. Asian Markets also took a deep cut and the same effect was witnessed in European Markets. Finally, for the day NIFTY posted a closing of 5445.45.

Net Selling of Rs. 243.58 Crore in Cash Segment whereas Net Buying of Rs. 544.14 Crore in F&O Segment by FIIs was witnessed on Friday’s Trading Session.

Net Selling of Rs. 166.95 Crore was witnessed in Proprietory Trading, whereas, Net Buying of Rs. 19.25 Crore and of Rs. 741.77 Crore was witnessed in Mutual Funds and Other Segments, respectively by FIIs on Friday.

In F&O Segment Net Buying of Rs. 975.07 Crore was witnessed in Index Options, whereas, Net Selling of Rs. 101.72 Crore, of Rs. 318.19 Crore and of Rs. 11.02 Crore was witnessed in Index Futures, Stock Futures and Stock Options Segment, respectively. 

 

NIFTY MAR FUTURE ended in a Premium of 17.10 points to the Spot NIFTY.

Technically, NIFTY is trading much 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 for the month of February. INDIA will be coming out with its MONTHLY INFLATION DATA. Industrial Production and Capacity Utilization for the month of January and Consumer Confidence Index for the month of February will be announced in JAPAN. UK will be coming out with its Nationwide Consumer Confidence for the month of February. Industrial Production for the month of January will be announced by EUROPEAN MONETARY UNION.

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 ended below its 20-Days EMA of 5474.95 yesterday and is still below the 50-Days SMA and 200-Days SMA of 5599.22 and 5667.53, 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 5465 / 5480 / 5520 levels. At the same time, 5420 / 5380 / 5350 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 46.78 and 48.52, respectively, showing a negative crossover.

2.  MACD (26 Days & 12 Days): Their Values are -17.43 and -38.49, respectively. a negative crossover is indicated by both the Moving Averages.

3.  +DI: 22.79, -DI: 24.66, ADX: 15.05: 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 5667.53 and 5474.95. Both the Moving Averages are showing Negative Crossover.