Nifty Outlook for 11th July 2011

On Friday, NIFTY made a Long Black Candlestick Pattern, representing itself more as a Black Opening Marubozu Candlestick Pattern, which signals that it was a day for bears and such a bearish rally should cause concern among the bulls. NIFTY had a very quite opening of almost 8-10 points in the Negative Territory. Immediately after opening NIFTY kissed its important resistance of 5750 by making a high of 5740.40 but could not cross it for whole of the trading session. After touching the day’s high, NIFTY dipped below 5700, but recovered again and traded range bound with high volatility. METAL & MINING stocks took a deep cut after the approval of draft mining bill stating that the coal companies will have to share 26% of their profits with the local population. The second sector which took a knock was the BANKING & FINANCE. Till the last hour of trading session, NIFTY maintained very well above 5700 level, which was looking unlikely to breach. But in the last hour of trading, NIFTY again dipped below 5700 and dragged till the low of 5651.05. REALTY & INFRA, SUGAR and all other sectors lost their sheen of the day and slipped suddenly. For the day, NIFTY ended the session at 5660.65, much below the crucial level of 57005.

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). After making a low of 5195.90 on 20^th June, 2011, NIFTY again reverted and entered the Extension marked on the chart. The positive and unpredicted strong move in NIFTY is aided by Short Covering earlier and then by approval of Measures adopted by European Government for Greece and sudden huge inflow from Foreign Institutional Investors (FIIs). Yesterday, NIFTY almost touched the level of 38.20% of the Retracement drawn by making a high of 5740.40, but closed even below the level of 5700 at 5660.65. A Negative Crossover between 200-Days SMA (Simple Moving Average) and 50-Days SMA is still intact, but at the same time both the 20-Days EMA (Exponential Moving Average) and 20-Days have given a positive crossover, which signals a positive move for some of the trading sessions ahead. Now, the 200-Days SMA of 5750 is playing a role of a stiff resistance level for NIFTY on the closing basis, whereas the level of 5170 proved to be a Good Support.

On the Economic Front, JAPAN will be coming out with its Tertiary Industry Index for the month of May and Consumer Confidence Index, Prelim Machine Tool Orders and Domestic Corporate Goods Price Index for the month of June. RICS Housing Price Balance and BRC Retail Sales Monitor for the month of June will be announced in UK.

Traders are suggested to trade cautiously by following Strict Stop Losses and Booking Fast Profits, whereas, Investors are suggested to focus on Bottom Fishing and invest in the markets for short term only, as markets are still prone to Uncertain Scenario both at the International and National Levels.

Q1 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. CMC, ESSAROIL and SINTEX will be announcing their Q1 FY11 Results tomorrow in INDIA. Alcoa Inc. will be announcing its results in US.

NIFTY is again trading above its 20-Days EMA and 50-Days SMA of 5558.48 and 5503.02, respectively, but at the same time is still below its 200-Days SMA of 5741.93.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 59.99 and 59.72, respectively, showing a short term negative crossover.

2. MACD (26 Days & 12 Days): Their Values are 79.38 and 12.08, respectively. A short term negative crossover is indicated by both the Moving Averages.

3. +DI: 32.72, -DI: 16.23, ADX: 22.70: The Positive Directional Index has gained strength over the Negative Directional Index and also the Average Directional Index is above 20, indicating that the market is in the trading range right now.

4.  SMA (200 Days), SMA (50 Days) & EMA (20 Days): The values of these indicators are 5741.93, 5503.02 and 5541.93.

Some Trading Stats of the Friday’s (08^th July, 2011) Trading Session:

Net Buying of Rs. 517.33 Crore in Cash while Net Selling of Rs. 315.39 Crore in F&O Segment by FIIs was witnessed on Friday’s Trading Session.

Net Selling of Rs. 601.51 Crore and of Rs. 1349.68 Crore was witnessed in Proprietory Trades and Others Segment, respectively, whereas, Net Buying of Rs. 139.81 Crore was witnessed in Mutual Funds Segment.

In F&O Segment Net Selling of Rs. 562.13 Crore and of Rs. 698.75 Crore was witnessed in Index Futures and Stock Futures, respectively, whereas, Net Buying of Rs. 886.07 Crore and of Rs. 59.42 Crore was witnessed in Index Options and Stock Options, respectively.

NIFTY JULY FUTURE ended at a Premium of 11.35 Points to NIFTY Spot.

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

DLF:                 Can touch the levels of 242/244, if crosses the level of 238.

AXISBANK:        Can touch the levels of 1280/1270, if breaches the level of 1300.

IDFC:               Can touch the levels of 132/131, if breaches the level of 134.

JPASSOCIAT:    Can touch the levels of 78.50/78, if breaches the level of 79.50.

For the day, intraday resistance for NIFTY comes at 5690 / 5720 / 5750 levels. At the same time, 5630 / 5600 / 5575 will act as major intraday support levels.