Nifty Outlook for 26th May 2011

Yesterday, NIFTY made a Black Opening Marubozu Candlestick Pattern, signaling that it was a day for bears and such a bearish rally should cause concern among the bulls. This Candlestick may be interpreted either as the initial phase of a bearish continuation pattern or it may also signal a bullish reversal depending on the preceding day's candlesticks. NIFTY breached its crucial and physiological support level of 5350 too on the Closing Basis by closing at 5348.95. NIFTY had a very flat opening of almost 5-10 points in Red Trajectory. For whole of the trading session, NIFTY traded in a very tight range but with a negative bias. Downside was mainly led by REALTY & INFRA and IT Sector Stocks. A weak opening of the European markets on the back of the European crisis further dented sentiments, as markets slumped to even lower levels, hitting one intraday low after another. NIFTY dragged till the level of 5238.70 in intraday trading. Again a good selling pressure was witnessed in the Index Constituent Stocks because of one or the other reason, which also led the respective sector stocks downward.

Technically, NIFTY has completed the southward movement of Fibonnaci Retracement drawn from the High of 6338.50 (08^th November, 2010) to the Low of 5177.70 (11^th February, 2011). NIFTY has also completed another longer Extension Level drawn from the Low of 4786.45 (25^th May, 2010) to the High of 6335.90 (08^th November, 2010). Yesterday, NIFTY made a low of 5367.45 breaching the 61.80% level of 5378.79; this level was also breached yesterday by NIFTY on Closing Basis by closing at 5348.95 for the day. Earlier, a Negative Crossover was witnessed between 200-Days SMA and 20-Days EMA. The Negative Crossover of 20-Days EMA (Exponential Moving Average) and the 50-Days SMA (Simple Moving Average) will now lead to more southward movement in NIFTY. This time selling pressure is more witnessed due to Uncertain Economic Conditions both Internationally and Domestically, Continuous Net Outflow from the FIIs and deep correction in the stocks prices in a minimal time. Till now 5350 was acting as a Good and Strong Support for NIFTY on closing basis, yesterday it was the first day for NIFTY to close below it and now if NIFTY consecutively closes two-three times below 5350, more strong selling pressure can be witnessed in the Markets. Now, the level of 5500 is acting as a crucial Resistance on the Closing Basis.

On the Economic Front, JAPAN will be coming out with its Tokyo Consumer Price Index for the month of May, National Consumer Price Index, Retail Trade and Large Retailer’s Sales for the month of April.  Gfk Consumer Confidence for the month of May will be announced by EUROPEAN MONETARY UNION. US will be coming out with its Initial Jobless Claims, Continuing Jobless Claims, Q1 Real Personal Consumption Expenditures, Q1 Gross Domestic Product Annualized and Q1 Gross Domestic Purchases Price Index.

Traders are suggested to trade cautiously by following Strict Stop Losses and Booking Fast Profits, whereas, Investors are suggested to make Fresh Investments at this point of time in the Markets in the stocks heavily beaten down with the Averaging Principle. As, it will be the last Thursday of the month (the F&O Expiry Day), a trading session of extreme volatility can be expected tomorrow.

Q4 FY11 Results Season is running all over the Financial World. Hence, here is a quick look at some important results to be announced domestically and internationally. ABAN, ANSAL PROPERTIES, CANBK, ENGINEERSIN, FDC, GSPL, HINDPETRO, INOX, JAICORP, MAX, MPHASIS, SUNTV, TATAMOTORS, TECHMAHINDRA, VIDEOIND and WELCORP will be announcing their Q4 FY11 Results tomorrow in INDIA. Lenovo Group Ltd and Tiffany and Co will be announcing its Results in US.

NIFTY is trading below its 20-Days EMA, 200-Days SMA and 50-Days SMA of 5513.84, 5754.76 and 5636.07, respectively on the Closing Basis. MACD (Moving Average Convergence Divergence) and RSI (Relative Strength Index) are signaling a bit of more selling pressure to come in.

As stated earlier, that if this time NIFTY did not take the support of 5450 and reverted, it may test the previous lows of 5370 and 5180 too, Traders and Investors should keep this in mind while aggressively dealing with the Markets. Markets are also moving on Events and Sentiments at this time.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 34.08 and 37.29, respectively, showing a negative crossover.

2. MACD (26 Days & 12 Days): Their Values are -134.26 and -131.00, respectively. A negative crossover is indicated by both the Moving Averages.

3. +DI: 14.60, -DI: 27.47, ADX: 28.19: 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 (200 Days), SMA (50 Days) & EMA (20 Days): The values of these indicators are 5754.76, 5636.07 and 5513.84.

Some Trading Stats of the Wednesday’s (25^th May, 2011) Trading Session:

Net Selling of Rs. 370.79 Crore in Cash, while Net Buying of Rs. 580.02 Crore in F&O Segment by FIIs was witnessed on Wednesday’s Trading Session.

Net Selling of Rs. 140.70 Crore and of Rs. 770.42 Crore was witnessed in Proprietory Trades and Others Segment, whereas, Net Buying of Rs. 396.66 Crore was witnessed in Mutual Funds Segment.

In F&O Segment Net buying Rs. 1278.40 Crore, of Rs. 79.66 Crore and of Rs. 2.53 Crore was witnessed in Index Options, Stock Futures and Stock Options Segment, respectively, whereas, Net Selling of Rs. 780.56 Crore was witnessed in Index Futures Segment.

NIFTY MAY FUTURE ended in a Premium of just 0.50 points to the Spot NIFTY.

A brief on some of the NIFTY 50 Stocks for TOMORROW:

KOTAKBANK:    Can move to the levels of 435/440.

SUNPHARMA:    Can move to the levels of 445/450.

HDFC:              Can dip to the levels of 620/615, if breaches the level of 640.

IDFC:                Can dip to the levels of 125/124, if breaches the level of 128.

INFOSYSTCH:    Can dip to the levels of 2750/2740, if breaches the level of 2785.

TATAPOWER:    Can dip to the levels of 1170/1160, if breaches the level of 1185. 


For the day, intraday resistance for NIFTY comes at 5360 / 5390 / 5420 levels. At the same time, 5320 / 5275 / 5250 will act as major intraday support levels.