Nifty Outlook for 16th September 2011

Yesterday, NIFTY made a White Candlestick Pattern, with a longer lower shadow, indicating that the day closed at its high point after making a substantial low for the day. Markets erased early losses, a day before the Reserve Bank is widely expected to increase rates for the 12th time in 18 months to help stem high inflation, as rate sensitive counters (realty, banking and auto) attracted strong trader sentiment. Triggered by positive global cues, NIFTY registered a Gap Up Opening of almost 50 points. However, failing to sustain the strength, within an hour of the opening bell it slipped in red and hit the intraday low of 4967.45. Though, the market shaved off some of the losses, it continued to reel under selling pressure till most part of the trade. A marginal cut in inflation numbers too didn’t do much to boost the sentiments. For the week ended Sept 3, primary articles inflation came in at 13.04% vs 13.34%,WoW. For the same period, food articles inflation was at 9.47% vs 9.55%, while fuel group inflation stood at 13.01% vs 12.55%. During the afternoon session, a firm opening of European markets saw the bourses recouped from the low levels of the day. Heavy Buying in the IT and REALTY & INFRA Stocks too helped the NIFTY regain the 5,000 mark in afternoon trade. Since then, it kept on hitting fresh intraday highs till the closing bell, marking it at the highest points of 5091.45. For the day, NIFTY registered a closing of 5075.70, very close to the day’s high mark.

Tomorrow will be marked as an important trading day, as market will be reacting to many important Industry Specific News (OIL & GAS, OMCs, EXPORT & IMPORT, etc.) as well as Macro Economic Factors.

Technically, NIFTY took a Strong support of 4720 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. However, yesterday NIFTY marked a closing above the 20-Days EMA of 5044.06 at 5075.70. A Negative Crossover between 200-Days SMA (Simple Moving Average) and 50-Days SMA is still intact. Right now, the level of 5200 is playing a role of a stiff resistance level for NIFTY on the closing basis, whereas the level of 4720 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. NIFTY is once again trying to enter this level, but still extreme uncertainties lie in the Markets although not in short term but in long term period. Hence, still the traders and investors should wait for fruitful results ahead. However, Traders are suggested to take the advantage of Swing Trading, which will appear many times in between.   

On the Economic Front, UK will be coming out with its Nationwide Consumer Confidence for the month of August. Current Account and Trade Balance for the month of July will be announced by EUROPEAN MONETARY UNION. US will be coming out with Total Net TIC Flows, Net Long-Term TIC Flows for the month of July and Reuters/Michigan Consumer Sentiment Index for the month of September. RBI (Reserve Bank of India) will release the next Mid-Quarter Review of Monetary Policy 2011-12 in INDIA.

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 closed above its 20-Days EMA of 5044.06, but it is still trading below all its 200-Days SMA and 50-Days SMA of 5547.42 and 5265.94. 14-Days RSI (Relative Strength Index) and 26-Days MACD (Moving Average Convergence and Divergence) have reverted from the oversold zone, but still with every sell off in the markets they are heading towards their oversold zone.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 49.85 and 45.06, respectively, showing a short term positive crossover.

2. MACD (26 Days & 12 Days): Their Values are 24.81 and -71.79, respectively. A short term positive crossover is indicated by both the Moving Averages.

3. +DI: 23.16, -DI: 26.25, ADX: 27.01: 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 5547.42, 5265.94 and 5054.51. 

Some Trading Stats of the Thursday’s (15^th September, 2011) Trading Session:

Net Buying of Rs. 136.55 Crore in Cash and of Rs. 123.21 Crore in F&O Segment by FIIs was witnessed on Thursday’s Trading Session.

Net Buying of Rs. 184.95 Crore and of Rs. 251.81 Crore was witnessed in Mutual Funds and Others Trades, whereas, Net Selling of Rs. 523.59 Crore was witnessed in Proprietory Trades.  

In F&O Segment Net Buying of Rs. 254.50 Crore and of Rs. 401.09 Crore was witnessed in Index Futures and Stock Futures, while, Net Selling of Rs. 483.01 Crore and of Rs. 49.37 Crore was witnessed in Index Options and Stock Options Segment.  

NIFTY SEP FUTURE ended at a Premium of 5.50 Points to the Spot NIFTY.

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

AXISBANK:        Can touch the levels of 1130/1140, if crosses the level of 1115.

DLF:                 Can touch the levels of 213/215, if crosses the level of 208.

GAIL:                Can touch the levels of 441/442, if crosses the level of 434.

AXISBANK:        Can touch the levels of 486/490, if crosses the level of 480.

RCOM:              Can touch the levels of 86.20/87, if crosses the level of 84.50.

RELIANCE:        Can touch the levels of 850/855, if crosses the level of 840.

SBIN:                Can touch the levels of 1935/1945, if crosses the level of 1905.

TATAMOTORS:  Can touch the levels of 156/158, if crosses the level of 152.

TCS:                 Can touch the levels of 1055/1065, if crosses the level of 1040.

LT:                   Can dip to the levels of 1570/1560, if breaches the level of 1590.

For the day, intraday resistance for NIFTY comes at 5090 / 5120 / 5150 levels. At the same time, 5050 / 5020 / 4980 will act as major intraday support levels.