Nifty Outlook for 01st November 2011

Yesterday, NIFTY made a Small Black Candlestick Pattern. The market started trade on negative note, taking a breather from nearly 6% rally last week. NIFTY after opening flat marked an intraday low of 5314.60 in the morning trade. However, the benchmarks shaved off losses on the back an upswing in IT and banking shares. India’s second largest lender ICICI Bank and IT bellwether Wipro posted strong earnings for the second quarter ended September 30, 2011, which propelled the indices higher. After the opening of European Markets too, not much of the movement was witnessed in the markets and NIFTY traded almost absolutely flat till the closing of the session. Sectorally: the FMCG index, which bucked the overall trend on the back of stellar earnings from Dabur and Hindustan Lever, jumped the most with 1.04% gains. On the other hand, the Oil & gas counter witnessed a heavy sell-off as BPCL reported disappointing results. Equities closed lower, triggered by a sell-off across global peers. Losses in oil & gas, metal and auto stocks were outpaced by gains in FMCG, banking and IT counters. Finally, for the day NIFTY managed to close at 5326.60, below the crucial mark of 5350.

Technically, a Negative Crossover between 200-Days SMA (Simple Moving Average) and 50-Days SMA is still intact. NIFTY has crossed its 20-Days EMA (Exponential Moving Average) and 50-Days SMA (Simple Moving Average) of 5113.28 and 5011.17, respectively on closing basis. Both the averages have given a Positive Crossover, as the 20-Days EMA has crossed the 50-Days SMA from downside. Right now, 20-Days EMA is also acting as a Good Support Level for NIFTY. It is trading much below its 200-Days SMA of 5406.77. After crossing the consolidation zone of 5170 on the higher side and 4720 on the lower side, NIFTY successfully crossed the level of 5170 on the approval of European Debt Deal and is now facing the resistance of 5400 on the closing basis. A Fibonnaci Retracement Level is being drawn from the High of 6338.50 (08^th November, 2010) to the 18-Months Low marked 4720.00 by NIFTY (26^th August, 2011). NIFTY has crossed the level of 61.80% and 50.00% of 5101.97 and 5338.27, respectively, but with a huge Gap which made traders reluctant to take the advantage of the move. Still the markets all over the Globe are doubtful about the clarity of the European Debt Deal. 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.   

As predicted earlier that 5170 on the upper side and 4720 on the lower side, NIFTY is trading in this range since the Starting of September series. It is making lower lows but is facing resistance at the same level again and again. Breakout on the either side will be deciding the further direction of the market in the short term. 5170 is the level again to be watched, if NIFTY crosses it and sustains above it successfully this time, it may touch the level of 5350 this time. NIFTY has crossed this level due to the approval of European Debt Deal and also made a high of 5399.70.

On the Economic Front, JAPAN will be coming out with its Labor Cash Earnings for the month of September, Vehicle Sales for the month of October and Monetary Base. HSBC Manufacturing PMI for the month of October will be announced in CHINA. UK will be coming out with Q3 Gross Domestic Product, Index of Services for the month of August, Nationwide Housing Prices and Purchasing Manager Index Manufacturing for the month of October. Purchasing Manager Index Manufacturing for the month of October will be announced in GERMANY. US will be announcing its Construction Spending for the month of September, ISM Manufacturing, ISM Prices Paid and Total Vehicle Sales for the month of October.

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.

Q2 FY11 Results Season is running all over the Financial World. Hence, more of Sector Specific and Stock Specific actions will be witnessed. Here is a quick look at some important results to be announced domestically and internationally tomorrow. ABBOTT INDIA, ACC, ABIRLANUVO, AMBUJACEM, CENTRALBNK, DIVISLAB, ESSAROIL, FDC, HINDPETRO, JUBILANT, MCLEODRUSS, MERCK, ORCHIDCHEM, PNB, ROLTA and SKF INDIA will be announcing their Results in INDIA. CME GROUP INC, THOMPSON REUTERS CORP and PFIZER INC will be announcing their Q3 FY11 Results in US.

NIFTY has crossed its 20-Days EMA (Exponential Moving Average) and 50-Days SMA (Simple Moving Average) of 5113.28 and 5011.77, respectively on closing basis. It is trading much below its 200-Days SMA of 5406.77. 14-Days RSI (Relative Strength Index) and 26-Days MACD (Moving Average Convergence and Divergence) are moving towards their overbought zone after being reverted from the oversold zone.

What does Indicators Say?

                   

1. RSI (14 Days & 9 Days): The values are 63.61 and 58.65, respectively, showing a short term positive crossover.

2. MACD (26 Days & 12 Days): Their Values are 127.44 and 65.43, respectively. A short term positive crossover is indicated by both the Moving Averages.

3. +DI: 36.45, -DI: 16.73, ADX: 17.90: The Positive Directional Index has gained strength over the Negative Directional Index and also the Average Directional Index is below 20, indicates that the market has entered in to the trading range right now.

4. SMA (200 Days), SMA (50 Days) & EMA (20 Days): NIFTY is trading below the levels of  200-Days SMA, but above the levels of 50-Days SMA and 20-Days EMA. These indicators are at the levels of 5406.77, 5011.77 and 5113.28, respectively. 

Some Trading Stats of the Monday’s (31^st October, 2011) Trading Session:

Net Buying of Rs. 358.78 Crore in Cash and of Rs. 736.27 Crore in F&O Segment by FIIs was witnessed on Monday’s Trading Session.

Net Selling of Rs. 128.29 Crore, of Rs. 1707.88 Crore and of Rs. 1414.98 Crore was witnessed in Mutual Funds, Proprietory Trades and Others Segment, respectively.

In F&O Segment Net Buying of Rs. 1113.24 Crore and of Rs. 33.16 Crore was witnessed in Index Options and Stock Options, respectively, while, Net Selling of Rs. 233.81 Crore and of Rs. 582.88 Crore was witnessed in Index Futures and Stock Futures, respectively.

NIFTY NOV FUTURE ended at a Premium 20.50 Points to the Spot NIFTY.

Pre Market Calls:

IOB: Buy ONLY IF ITS TRADES ABOVE 103 for the TARGETS of 106/108, with the STRICT SL of 101.60.

CESC: Buy ONLY IF ITS TRADES ABOVE 276 for the TARGETS of 281/284, with the STRICT SL of 272.

For the day, intraday resistance for NIFTY comes at 5350 / 5380 / 5420 levels. At the same time, 5280 / 5250 / 5220 will act as major intraday support levels.