Nifty Outlook for 19th September 2011

On Friday, NIFTY made a Small Black Candlestick Pattern, which can be interpreted both as continuation and a reversal pattern. Market advanced overlooking a hike in key lending rates by the Reserve Bank of India (RBI) as interest rate sensitive sectors (banking, auto, consumer durables and real estate) led a broad based rally. Market kick-started trade on a positive note, boosted by firm Asian cues and expectations that central bank would tone down its hawkish stance on growth slowdown concerns. NIFTY registered a Gap Up Opening of almost 50 Points. However, investors began selling heavily in response to the central banks’ decision to hike key policy rates (repo, reverse repo) by 25 basis points each during afternoon trade. NIFTY dipped to the day’s low of 5068.10, but didn’t breach the crucial support of 5050. Nonetheless, shares emerged from the negative zone within few minutes on the back of strong opening across European peers. The bullish trend continued for the rest of the day, with interest-rate sensitive counters cheering up on the little signs of RBI loosening its grip. For the day, NIFTY registered a closing of 5084.25.

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. On Friday, NIFTY crossed this level once while trading and also made a high of 5143.60, but closed below the level of 5100 too at 5084.25. NIFTY may touch the levels of 5300 too this time 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. Construction Output for the month of July will be announced by EUROPEAN MONETARY UNION. US will be coming out with its NAHB Housing Market Index for the month of September.

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 5047.89, but it is still trading below all its 200-Days SMA and 50-Days SMA of 5543.69 and 5254.98. 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 50.37 and 46.12, respectively, showing a short term positive crossover.

2. MACD (26 Days & 12 Days): Their Values are 39.85 and -49.46, respectively. A short term positive crossover is indicated by both the Moving Averages.

3. +DI: 25.40, -DI: 24.97, ADX: 25.14: The Positive Directional Index has gained strength over the Negative 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 5543.69, 5254.98 and 5047.89. 

Some Trading Stats of the Friday’s (16^th September, 2011) Trading Session:

Net Buying of Rs. 395.16 Crore in Cash and of Rs. 680.22 Crore in F&O Segment by FIIs was witnessed on Friday’s Trading Session.

Net Buying of Rs. 140.645 Crore was witnessed in Proprietory Trades, whereas, Net Selling of Rs. 38.58 Crore and of Rs. 225.28 Crore was witnessed in Mutual Funds and Others Trades.  

In F&O Segment Net Buying of Rs. 88.37 Crore, of Rs. 311.52 Crore, of Rs. 265.95 Crore and of Rs. 14.38 Crore was witnessed in Index Futures, Index Options, Stock Futures and Stock Options, respectively.  

NIFTY SEP FUTURE ended at a Premium of 3.35 Points to the Spot NIFTY.

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

AXISBANK:        Can touch the levels of 1150/1160, if crosses the level of 1140.

DRREDDY:        Can touch the levels of 1550/1560, if crosses the level of 1530.

GRASIM:            Can touch the levels of 2330/2340, if crosses the level of 2315.

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

NTPC:               Can touch the levels of 175/176, if crosses the level of 173.

ONGC:              Can touch the levels of 278/280, if crosses the level of 275.

POWERGRID:     Can touch the levels of 103/104, if crosses the level of 100.

SBIN:                Can touch the levels of 1985/1995, if crosses the level of 1950.

SIEMENS:                    Can touch the levels of 880/885, if crosses the level of 870.

STER:               Can touch the levels of 137/138, if crosses the level of 135.

TATAMOTORS:  Can touch the levels of 166/168, if crosses the level of 162.

TATAPOWER:    Can touch the levels of 996/1000, if crosses the level of 986.

AMBUJACEM:    Can dip to the levels of 140/138, if breaches the level of 143.

BHEL:               Can dip to the levels of 1665/1655, if breaches the level of 1680.

BPCL:               Can dip to the levels of 650/645, if breaches the level of 660.

HINDUNILVR:     Can dip to the levels of 332/330, if breaches the level of 339.

ICICIBANK:        Can dip to the levels of 875/870, if breaches the level of 884.

RCOM:              Can dip to the levels of 79.60/79, if breaches the level of 81.60.


For the day, intraday resistance for NIFTY comes at 5120 / 5150 / 5180 levels. At the same time, 5050 / 5020 / 4980 will act as major intraday support levels. 

For the week, resistance for NIFTY comes at 5200 & 5320 levels. At the same time, 4880 & 4750 will act as major support levels.