Nifty Outlook for 12th July 2011

Yesterday, 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 10-12 points in the Negative Territory, immediately after opening NIFTY marked its day’s high of 5652.90. However, a sudden bout of selling ensued and the markets fell lower into the negative terrain. After making an unsuccessful attempt at breaking above the previous closing and falling even lower, the markets traded extremely range-bound till the afternoon session. Volatility took front seat again in the late hours of trade, resulting in the markets falling to their fresh intraday lows. European Market also aided the selling pressure by opening deep in the Red, due to latest tensions over Portugal. NIFTY dragged till the level of 5601.70, but didn’t breach the important support of 5600. IT, REALTY & INFRA, BANKING are the entire responsible sectors for the downfall. For the day, NIFTY ended the session at 5616.10.

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. Yesterday, NIFTY almost touched the level of 50.00% 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, BOJ (Bank of Japan) will be announcing the Monetary Policy Statement and the Interest Rate Decision. Consumer Price Index for the month of June will be announced in GERMANY. UK will be coming out with its Trade Balance and CB Leading Indicator Index for the month of May, Retail Price Index, Consumer Price Index, DCLG House Price Index, Nationwide Consumer Price Index and Consumer Price Index for the month of June. Trade Balance for the month of May will be announced in US. IIP (Index of Industrial Production) Data for the month of May and Cabinet Reshuffling will be announced in INDIA.

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. INFY, KOUTONS and UCALFUEL 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 5563.97 and 5501.32, respectively, but at the same time is still below its 200-Days SMA of 5740.21.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 55.71 and 58.92, respectively, showing a short term negative crossover.

2. MACD (26 Days & 12 Days): Their Values are 100.24 and 29.71, respectively. A short term negative crossover is indicated by both the Moving Averages.

3. +DI: 30.89, -DI: 20.00, ADX: 22.61: 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 5740.21, 5501.32 and 5563.97.

Some Trading Stats of the Monday’s (11^th July, 2011) Trading Session:

Net Buying of Rs. 432.95 Crore in Cash while Net Selling of Rs. 283.40 Crore in F&O Segment by FIIs was witnessed on Monday’s Trading Session.

Net Selling of Rs. 503.73 Crore was witnessed in Proprietory Trades,whereas, Net Buying of Rs. 41.34 Crore and of Rs. 777.78 Crore was witnessed in Mutual Funds and Others Segment, respectively.

In F&O Segment Net Selling of Rs. 678.48 Crore and of Rs. 254.87 Crore was witnessed in Index Futures and Stock Futures, respectively, whereas, Net Buying of Rs. 564.67 Crore and of Rs. 85.28 Crore was witnessed in Index Options and Stock Options, respectively.

NIFTY JULY FUTURE ended at a Premium of 0.95 Points to NIFTY Spot.

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

ONGC:              Can touch the levels of 286/287, if crosses the level of 282.

AXISBANK:        Can dip to the levels of 1240/1230, if breaches the level of 1260.

For the day, intraday resistance for NIFTY comes at 5650 / 5690 / 5720 levels. At the same time, 5580 / 5550 / 5520 will act as major intraday support levels.