Nifty Outlook for 09th August 2011

Yesterday, markets started in freefall. 'Red' was the color of the day. The bourses, which extended previous session’s losses, see-sawed in yesterday's session on the back of US debt crisis concerns. The US downgrade has not only slammed the nation’s political process, but also created havoc on the global front. To add to the already prevailing concern, S&P’s US downgrade yesterday saw all the global markets adding to their Friday’s losses. The Asian stocks slithered and extended worst slump since 2009. NIFTY opened with a Gap of almost 127.50 points. Index Constituents were down almost 6-7% in the opening itself. IT stocks witnessed the deepest cuts. NIFTY made a low a New-52 Week Low of 5054.05 for the day. Till the first half of trading session, Markets recovered some of that lost ground on news that the European Central Bank was buying Italian and Spanish bonds and traded at the levels of 5200, also marked a high of 5204.20 for the day. Again, when the US Futures started trading deep in the red and dipped almost 230 points, markets (EUROPEAN & INDIAN) slipped back into Red and NIFTY again lost its recovered points. For, the day market ended at 5118.50 levels, maintaining marginally above the levels of 5100.

Fear all over the Globe is the main cause of such fierceful crash within a short span of time. Still more bad news is in the offing regarding the International Economies. Indian Markets are just paying the cost of Globalization, hence affected to that level much. Right now, no signs are visible for a Pullback, but at the same time, traders and investors should be ready for a sharp pullback, as this crash is coming with huge Gaps and with volume backed by fears more.

Technically, NIFTY has been trading between the Fibonnaci Retracement drawn from the High of 6338.50 (08^th November, 2010) to the Low of 5177.70 (11^th February, 2011) and the Longer Extension Level drawn from the Low of 4786.45 (25^th May, 2010) to the High of 6335.90 (08^th November, 2010) since it made a life-time high of 6338.50, or say since December (last 9 months). Yesterday, NIFTY took another hard knock by breaching its important support level of 5100. It opened much below the lower trendline marked from the low of 5177.70 (02^nd February, 2011) to the low of 5195.90 (26^th June, 2011). NIFTY breached this lower trendline on closing basis yesterday by closing at 5118.50. The 20-Days EMA and 50-Days SMA have again made a Negative Crossover, hence, indicating more selling pressure to creep in. A Negative Crossover between 200-Days SMA (Simple Moving Average) and 50-Days SMA is still intact. NIFTY again breached all its important support levels just in a day of trading. Now, the 20-Days EMA of 5451.75 is playing a role of a stiff resistance level for NIFTY on the closing basis, whereas the level of 5080 will be acting as a Good Support Level in the coming sessions. The so-called level of 4800 will soon be achieved by NIFTY in the coming period, as there is more Bad News in the offing in terms of International Economic Uncertainties.

On the Economic Front, CHINA will be coming out with its Producer Price Index, Consumer Price Index, Urban Investment (YTD), Retail Sales and Industrial Production for the month of July. Consumer Confidence Index, Preliminary Machine Tool Orders, Domestic Corporate Goods Price Index for the month of July and Tertiary Industry Index for the month of June will be announced in JAPAN. GERMANY will be coming out with its Current Account and Trade Balance for the month of June. Industrial Production, Manufacturing Production, Goods Trade Balance, Trade Balance for the month of June will be announced in UK. US will be coming out with Q2 Unit Labor Costs, NSIER GDP Estimate for the month of July and also Federal Bank Interest Rate Decision is due.

Traders are suggested to trade cautiously by following Strict Stop Losses and Booking Fast Profits, whereas, Investors are suggested to stay from the markets right now, as market will give better chances ahead for Bottom Fishing and earning handsome returns thereafter.  

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. ABB, BRFL, ESSARPORTS, GMRINFRA, GUJARAT INDUSTRIES, GSPL, JUBILANT LIFE, MADRASCEM, SATYAMCOMP, SOBHA, TATACOMM, UBL and WOCKHARDT will be announcing their Q1 FY11 Results tomorrow in INDIA. Walt Disney Co will be announcing its Results in US tomorrow.

NIFTY is trading below all its Moving Averages like 200-Days SMA, 50-Days SMA and 20-Days EMA of 5681.19, 5510.52 and 5451.75, respectively.  

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 25.66 and 37.62, respectively, showing a short term negative crossover.

2. MACD (26 Days & 12 Days): Their Values are -82.40 and -34.88, respectively. A short term negative crossover is indicated by both the Moving Averages.

3. +DI: 14.18, -DI: 42.07, ADX: 19.75: The Negative Directional Index has gained strength over the Positive Directional Index and also the Average Directional Index is below 20, indicating that the market is in the trading range right now.

4. SMA (200 Days), SMA (50 Days) & EMA (20 Days): NIFTY is trading below the levels of of these indicators are 5681.19, 5510.52 and 5451.75.

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

Net Selling of Rs. 1385.78 Crore in Cash while Net Buying of Rs. 1203.49 Crore in F&O Segment by FIIs was witnessed on Monday’s Trading Session.

Net Buying of Rs. 224.11 Crore and of Rs.1877.76 Crore was witnessed in Mutual Funds and Others Trades, whereas, Net Selling of Rs. 3480.64 Crore was witnessed in Proprietory Trades.

In F&O Segment Net Buying of Rs. 126.99 Crore, of Rs. 546.65 Crore and of Rs. 531.66 Crore was witnessed in Index Futures, Index Options and Stock Futures, respectively, whereas, Net Selling of Rs. 1.80 Crore was witnessed in Stock Options.  

NIFTY AUG FUTURE ended at 7.70 Points Premium to the Spot NIFTY.

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

DLF:                 Can dip to the levels of 191/188, if breaches the level of 195.

BAJAJ-AUTO:   Can touch the levels of 1445/1455, if crosses the level of 1420.

HEROHONDA:    Can touch the levels of 1885/1895, if crosses the level of 1860.

ONGC:              Can touch the levels of 290/292, if crosses the level of 284.

For the day, intraday resistance for NIFTY comes at 5150 / 5180 / 5220 levels. At the same time, 5080 / 5050 / 5010 will act as major intraday support levels.