Nifty Outlook for 30th August 2011

Yesterday, NIFTY made a White Opening Marubozu Candlestick Pattern. In the case of downtrend a White Opening Marubozu is called as a Bullish Belt Hold Pattern. Here it can be interpreted as a bearish reversal pattern. This candle has engulfed last two day’s candles completely into it. A positive analysis of the US economy from Federal Reserve Chairman Ben Bernanke on Friday’s Jackson Hole meet, enhanced equities worldwide and the same was reflected on Dalal Street too. NIFTY witnessed a Gap Up Opening of almost 55-60 points. After kick-starting the trade on a positive note, market kept the trade in the same direction for whole of the Sharp Pull Back. NIFTY continued its upside movement even after the opening of the European Bourses, as they also registered an overwhelming Opening. NIFTY for the day made a high of 4934.40; almost rise 125 Points from the opening level. Excellent recovery was witnessed in IT, METAL, REALTY & INFRA and BANKING & FINANCE Sectors. For the day, NIFTY closed near to its day’s high at 4919.60.

Technically, NIFTY finally touched the most awaited level of 4800, awaited since the next week of Diwali 2010. Yesterday, NIFTY took a Strong support of 4800 once again and bounced back from that only. As mentioned earlier too that the so-called level of 4800 got achieved by NIFTY; still it is in the down trend, as there is more Bad News in the offing in terms of International Economic Uncertainties, hence traders and investors should be ready for the more down side ahead. The 20-Days EMA and 50-Days SMA are in 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. Right now, the level of 5000 is playing a role of a stiff resistance level for NIFTY on the closing basis, whereas the level of 4650 will be acting as a Good Support Level in the coming sessions. A Fibonnaci Retracement Level is being drawn from the High of 6338.50 (08^th November, 2010) to the recent 18-Months Low marked 4720.00 by NIFTY (26^th August, 2011), which represents the level of 5100 (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, JAPAN will be coming out with its Nomura/JMMA Manufacturing Purchasing Manager Index for the month of August and Industrial Production for the month of July. Mortgage Approvals, Net Lending to Individuals, M4 Money Supply for the month of July and Gfk Consumer Confidence for the month of August will be announced in UK. EUROPEAN MONETARY UNION will be coming out with its Consumer Confidence, Economic Confidence and Industrial Confidence for the month of August. S&P/Case-Shiller Home Price Indices for the month of June and Consumer Confidence for the month of August 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.

NIFTY is trading below all its Moving Averages like 200-Days SMA, 50-Days SMA and 20-Days EMA of 5598.38, 5361.24 and 5058.98, respectively. 14-Days RSI (Relative Strength Index) and 26-Days MACD (Moving Average Convergence and Divergence) are moving towards their oversold zone with every sell off in the markets.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 38.18 and 30.01, respectively, showing a short term positive crossover.

2. MACD (26 Days & 12 Days): Their Values are -248.17 and -231.31, respectively. A short term positive crossover is indicated by both the Moving Averages.

3. +DI: 12.04, -DI: 35.28, ADX: 43.75: The Negative Directional Index has gained strength over the Positive Directional Index and also the Average Directional Index is above 40, indicates 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 5598.38, 5361.24 and 5058.98.

Some Trading Stats of the Monday’s (29^th August, 2011) Trading Session:

Net Buying of Rs. 366.19 Crore in Cash and of Rs. 1152.23 Crore in F&O Segment by FIIs was witnessed on Monday’s Trading Session.

Net Selling of Rs. 1600.34 Crore and of Rs. 209.89 Crore was witnessed in Proprietory and Others Trades, whereas, Net Buying of Rs. 43.60 Crore was witnessed in Mutual Funds Segment.  

In F&O Segment Net Buying of Rs. 1079.13 Crore and of Rs. 361.22 Crore was witnessed in Index Futures and Stock Futures, whereas, Net Selling of Rs. 268.46 Crore and of Rs. 19.66 Crore was witnessed in Index Options and Stock Options.  

NIFTY SEP FUTURE ended at a Premium of 13.55 Points to the Spot NIFTY.

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

AXISBANK:        Can touch the levels of 1060/1070, if crosses the level of 1040.

HCLTECH:         Can touch the levels of 399/401, if crosses the level of 392.

HDFCBANK:      Can touch the levels of 464/466, if crosses the level of 457.

HINDALCO:       Can touch the levels of 149/150, if crosses the level of 144.

JPASSOCIAT:    Can touch the levels of 60.30/60.90, if crosses the level of 58.60.

M&M:               Can touch the levels of 742/745, if crosses the level of 735.

TATASTEEL:     Can touch the levels of 460/462, if crosses the level of 450.

TCS:                 Can touch the levels of 1040/1050, if crosses the level of 1025.

For the day, intraday resistance for NIFTY comes at 4930 / 4960 / 4990 levels. At the same time, 4880 / 4850 / 4820 will act as major intraday support levels.