Nifty Outlook for 13th July 2011

Yesterday, NIFTY made a Long Black Candlestick Pattern. It was quite an eventful day for the Dalal Street with free flow downslide. NIFTY had a Gap Down Opening of almost 60 points aided by Negative Global Cues from Europe, which was spread all over the Globe and the Big Boy’s INFY Q1 FY11 Results, which did not met the street’s expectations. INFY along with all the other Tech Biggies led the CNX IT Index down by almost 3-4% right from the opening of the session. Market bled due to multiple reasons like, Average Quarterly Results of INFY, Fear spread all over the Globe about the Contagion Effect of European Debt Crisis spreading to Italy and Spain too, Poor IIP (Index of Industrial Production) Numbers of India for the month of May, Ineffective Cabinet Reshuffling and Profit Booking. After the Gap down, NIFTY recovered almost 20-25 points from the day’s low and then kept trading range bound awaiting the IIP Data and Cabinet Reshuffling Announcements. For the month ended May 31, 2011, IIP stood at 5.6% vs 6.3%, MoM. After the data, NIFTY bounced sharply almost from the day’s low and made a high of 5580.25 for the day. But it couldn’t sustain at that level for long and again started trading a bit lower in a range, awaiting the opening of European Markets. European Markets opened deep in the Red; hence, the second sell-off of almost 40 points was aided by them. NIFTY breached its crucial support of 5500 while trading and made a low of 5496.95 for the day. IT, BANKING & FINANCE, INFRA & REALTY, METAL and AUTO Sectors were the top losers of the day. For the day, NIFTY maintained to close above 5500 at 5526.15.

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 opened much below the level of 50.00% of the Retracement drawn by making a high of 5740.40 and closed at 5526.15 (below its 20-Days EMA of 5560.37), taking the support of the 50-Days SMA of 5500.54, however, it breached it in the intraday trading by making a low of 5496.95. 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, CHINA will be coming out with its Retail Sales and Industrial Production for the month of June and Q2 Gross Domestic Product. Industrial Production for the month of May and BOJ’s (Bank of Japan’s) Monthly Economic Survey will be announced in JAPAN. GERMANY will be announcing its Wholesale Price Index for the month of June. Average Earnings and ILO Unemployment Rate for the month of May and Claimant Count Change and Claimant Count Rate for the month of June will be announced in UK. EUROPEAN MONETARY UNION will be coming out with its Industrial Production for the month of May. Import Price Index and Monthly Budget Statement for the month of June and MBA Mortgage Applications will be announced in US.  

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. BAJAJFINSERV and MPS will be announcing their Q1 FY11 Results tomorrow in INDIA. Yum! Brands Inc and Marriott International Inc will be announcing their results tomorrow in US.

NIFTY is again trading below its 20-Days EMA of 5560.37 and 200-Days SMA of 5737.75. It also breached its 50-Days SMA in intraday trading, however it closed above it.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 48.23 and 56.78, respectively, showing a short term negative crossover.

2. MACD (26 Days & 12 Days): Their Values are 105.04 and 44.78, respectively. A short term negative crossover is indicated by both the Moving Averages.

3. +DI: 27.54, -DI: 27.37, ADX: 21.01: 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 5737.75, 5500.54 and 5560.37.

Some Trading Stats of the Tuesday’s (12^th July, 2011) Trading Session:

Net Selling of Rs. 969.44 Crore in Cash while Net Buying of Rs. 272.34 Crore in F&O Segment by FIIs was witnessed on Tuesday’s Trading Session.

Net Selling of Rs. 750.19 Crore was witnessed in Proprietory Trades, whereas, Net Buying of Rs. 113.53 Crore and of Rs. 920.07 Crore was witnessed in Mutual Funds and Others Segment, respectively.

In F&O Segment Net Selling of Rs. 645.04 Crore, of Rs. 376.96 Crore and of Rs. 45.82 Crore was witnessed in Index Futures, Stock Futures and Stock Options, respectively, whereas, Net Buying of Rs. 1340.18 Crore was witnessed in Index Options.

NIFTY JULY FUTURE ended at a Premium of 13.80 Points to NIFTY Spot.

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

CIPLA:              Can dip to the levels of 316/315, if breaches the level of 321.

DLF:                 Can dip to the levels of 215/214, if breaches the level of 220.

HINDALCO:       Can dip to the levels of 173/172, if breaches the level of 175.

INFY:                Can dip to the levels of 2750/2740, if breaches the level of 2790.

JINDALSTEL:     Can dip to the levels of 608/606, if breaches the level of 615.

TATASTEEL:     Can dip to the levels of 563/562, if breaches the level of 571.

For the day, intraday resistance for NIFTY comes at 5550 / 5580 / 5620 levels. At the same time, 5500 / 5480 / 5450 will act as major intraday support levels.