Nifty Outlook for 15th March 2011

Yesterday, NIFTY made a Long White Candlestick Pattern, which shows the presence of Strong Buying Pressure in the markets. It signals a possible trend reversal, as hinted by the Friday’s Candle (Bullish Long Legged Doji). NIFTY witnessed a muted opening in the negative terrain of almost 10-15 points, but immediately after the opening in just a span of five minutes, NIFTY turned into Green and witnessed a one-sided move for whole of the session. On Friday, a panic selling was witnessed, backed by Poor January IIP Data and the news flow of powerful Earthquake and Tsunami in Northern Japan. Stocks like, METAL, BANKING, FINANCE, MINING, TEXTILE, AUTO and CAPITAL GOODS were battered heavily on Friday, but yesterday, again a pullback was witnessed in the same stocks. Markets were eagerly waiting for the Monthly Inflation Numbers, which came as February WPI Inflation t 8.31% Vs 8.23% (MoM Basis). After the announcement, of data, NIFTY consolidated a bit till the second half of the session and then again shot up to new intraday highs, making a high of 5537.30 for the day. Although, the biggest Natural Disaster, which shook Japan, had an impact on the financial markets, more or less directly related to the Japanese Economy. Finally, for the day NIFTY posted a strong closing of 5531.50.

Net Buying of Rs. 414.35 Crore in Cash Segment and of Rs. 1553.57 Crore in F&O Segment by FIIs was witnessed on Monday’s Trading Session.

Net Selling of Rs. 118.64 Crore  and of Rs. 678.36 Crore was witnessed in Proprietory Trading and Other Segments, respectively, whereas, Net Buying of Rs. 252.86 Crore was witnessed in Mutual Funds and Other Segments, respectively by FIIs on Monday.

In F&O Segment Net Buying of Rs. 1261.88 Crore, of Rs. 366.25 Crore was witnessed in Index Futures and Index Options,respectively, whereas, Net Selling of Rs. 69.31 Crore and of Rs. 5.26 Crore and of Rs. 11.02 Crore was witnessed in Stock Futures and Stock Options Segment,respectively. 

 

NIFTY MAR FUTURE ended in a Premium of 24.20 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, JAPAN will be coming out with Machine Tool Orders for the month of February. DCLG House Price Index for the month of January, Nationwide Consumer Confidence for the month of February and CB Leading Indicator Index will be announced in UK. EUROPEAN MONETARY UNION will be announcing its Q4 Employment Change and ZEW Survey – Economic Sentiment for the month of March. ZEW Survey – Economic Sentiment and Current Situation for the month of March will be announced in GERMANY. US will be coming out with its Net Long-Term TIC Flows and Total Net TIC Flows for the month of January, Import Price Index, NY Empire State Manufacturing Index and NAHB Housing Market Index for the month of March. Apart from this, Federal Bank will be coming out with its Interest Rate Decision too.

  

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 well above its 20-Days EMA of 5480.34 yesterday, but is still trading below its 50-Days SMA and 200-Days SMA of 5587.81 and 5669.76, 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 52.35 and 49.28, respectively, showing a negative crossover.

2.  MACD (26 Days & 12 Days): Their Values are -11.41 and -30.85, respectively. a negative crossover is indicated by both the Moving Averages.

3.  +DI: 23.53, -DI: 22.96, ADX: 14.06: 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 5587.81 and 5480.34. Both the Moving Averages are showing Negative Crossover.