Nifty Outlook for 11th August 2011

Yesterday, the six-day losing streak ended on Dalal Street. Post an upbeat opening; NIFTY retraced its key psychological support level of 5100. It opened with a Gap of almost 110 points at the level of 5196.55 and immediately marked a High of 5197.95 for the day. NIFTY could not maintain itself at the high of the day and started slipping. Till the opening of European Markets or say till the First Half of the Trading Session, markets traded range bound in the Green Territory. After the opening of European Markets, which opened not that strongly as expected, NIFTY started losing its sheen, and slipped to the Day’s Low of 5123.35. The broader market was the outperformer for the day. An excellent Short Covering was witnessed in the most beaten down sectors, like, AUTO, REALTY, IT and METAL. For the day NIFTY managed to close at the level of 5083.40.

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 opened just 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) at 51296.55. NIFTY is trading below this lower trendline on closing basis yesterday by closing at 5161.00. 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. Now, the level of 5275 is playing a role of a stiff resistance level for NIFTY on the closing basis, whereas the level of 5000 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. A Fibonnaci Retracement Level is being drawn from the High of 6338.50 (08^th November, 2010) to the recent 14-Months Low marked 4946.45 by NIFTY (09^th August, 2011), which represents the level of 5274.36 (Level of 61.80%) as the first important resistance level to be crossed on the Closing Basis for the NIFTY to enter in a Comfortable Zone for traders. 

On the Economic Front, CHINA will be coming out with its M2 Money Supply for the month of July. Wholesale Price Index for the month of July will be announced in GERMANY. ECB (European Central Bank) Monthly Report will be declared by EUROPEAN MONETARY UNION. UK will be coming out with its CB Leading Indicator Index for the month of June and Nationwide Consumer Confidence for the month of July. Trade Balance for the month of June, Initial Jobless Claims and Continuing Jobless Claims 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 stay from the markets right now, as market will give better chances ahead for Bottom Fishing and earning handsome returns thereafter.  

Q1 FY12 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. ABBOTT INDIA, AMTEKAUTO, ANANTRAJ, ANSALAPI, APOLLOTYRE, CASTROL, DREDGCORP, GUJARATGAS, JPPOWER, JUBLFOOD, LML, MOSERBAER, PARSVNATH, RELINFRA, RPOWER, ROLTA, RENUKA and TATAMOTORS will be announcing their Q1 FY12 Results tomorrow in INDIA.

NIFTY is trading below all its Moving Averages like 200-Days SMA, 50-Days SMA and 20-Days EMA of 5671.40, 5492.16 and 5891.41, respectively. 14-Days RSI (Relative Strength Index) and 26-Days MACD (Moving Average Convergence and Divergence) have also reached to their oversold zone and are indicating a pull back in the short term.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 32.41 and 34.42, respectively, showing a short term positive crossover.

2. MACD (26 Days & 12 Days): Their Values are -132.10 and -65.86, respectively. A short term positive crossover is indicated by both the Moving Averages.

3. +DI: 13.11, -DI: 39.45, ADX: 24.34: 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 5671.40, 5492.16 and 5391.41.

Some Trading Stats of the Wednesday’s (10^th August, 2011) Trading Session:

Net Buying of Rs. 152.87 Crore in Cash while Net Buying of Rs. 1982.97 Crore in F&O Segment by FIIs was witnessed on Wednesday’s Trading Session.

Net Selling of Rs. 22.07 Crore, of Rs. 759.33 Crore and of Rs. 1769.60 Crore was witnessed in Mutual Funds, Proprietory Trades and Others Segment, respectively.

In F&O Segment Net Buying of Rs. 1528.83 Crore, of Rs. 243.17 Crore and of Rs. 216.02 Crore was witnessed in Index Futures, Index Options and Stock Futures, respectively, whereas, Net Selling of Rs. 5.05 Crore was witnessed in Stock Options.  

NIFTY AUG FUTURE ended at a Discount of 2.35 Points to the Spot NIFTY.

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

BAJAJ-AUTO:   Can touch the levels of 1500/1510, if crosses the level of 1485.

HINDALCO:       Can touch the levels of 160/161, if crosses the level of 156.

MARUTI:           Can touch the levels of 1295/1305, if crosses the level of 1280.

SAIL:                Can touch the levels of 117/118, if crosses the level of 113.

For the day, intraday resistance for NIFTY comes at 5190 / 5230 / 5250 levels. At the same time, 5120 / 5090 / 5050 will act as major intraday support levels.