On Friday, NIFTY made a Doji Candlestick Pattern, showing
indecision about the direction of the market and it represents a tug of war
between buyers and sellers. Doji simply shows that market moved above and below
the opening price during the day, but then it closed either exactly at or very
near the opening price. The overall result is a standoff. It shows that neither
the bulls nor the bears were able to gain control during the day and it is
possible that a turning point can develop soon. Equities rebounded strongly on
Friday, with the Sensex gaining over 3%, as investors cheered European Central
Bank’s plans to inject liquidity in its struggling banking system. A rally
in US markets for three consecutive days helped the Nifty and the Sensex open
with a huge gap up. Strong Asian cues during the day provided much needed
muscle to the bulls. NIFTY opened with a gain of 130 points. However, the
benchmarks shaved off gains to hit fresh intraday lows, albeit in green, during
mid-afternoon trade on rise in weekly food inflation data and weakness across
European peers. NIFTY marked a low of 4861.20 for the day. The calmness
was, nevertheless, short-lived as strong buying emerged at pre-close session in
metal counters. BANKING and METAL Stocks closed in the positive terrain, with
gains of up to 5% and 3%, respectively. Finally, for the day NIFTY managed to
close at 4888.05, near to the day’s low.
Fitch Ratings issued twin cuts
to two of the euro zone's largest economies as it downgraded its foreign and
local currency ratings on Italy and Spain. The effect if this news
flow will be witnessed in the Financial Markets all over the Globe tomorrow
only.
Technically, NIFTY took a Strong
support of 4720 once again and bounced back from that. 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. Also 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 (08th
November, 2010) to the recent 18-Months Low marked 4720.00 by NIFTY (26th
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 has got reverted from
this level for the third time and closed much below it. 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.
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.
On the Economic Front, JAPAN will be coming out with its Trade
Balance – BPO Basis and Current Account for the month of August. FDI – Foreign Direct
Investment for the month of September will be announced in CHINA. GERMANY will be announcing its Trade Balance and Current
Account Balance for the month of August. Sentix Investor Confidence for the
month of October will be announced by EUROPEAN
MONETARY UNION. UK will be announcing RICS Housing Price Balance 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 is trading below all its
Moving Averages like 200-Days SMA, 50-Days SMA and 20-Days EMA of 5474.21, 5065.82
and 4938.65, respectively. 14-Days RSI (Relative Strength Index) and 26-Days
MACD (Moving Average Convergence and Divergence) are again heading towards
their oversold zone.
What does Indicators Say?
2. MACD (26 Days & 12 Days): Their Values are 76.12 and 23.29, respectively. A short term positive crossover is indicated by both the Moving Averages.
3. +DI: 22.50, -DI: 29.93, ADX: 19.92: The Negative Directional Index has gained strength over the Positive Directional Index and also the Average Directional Index is above 20, indicates that the market has entered in to the trending range right now.
4. SMA (200 Days), SMA (50 Days) & EMA (20 Days): NIFTY is trading below the levels of these indicators are 5474.21, 5065.82 and 4938.65.
Some Trading Stats of the Friday’s (07th October, 2011)
Trading Session:
Net Buying of Rs. 491.55 Crore in Cash and of Rs. 2437.10 Crore in F&O Segment by FIIs was witnessed on Friday’s Trading Session.
Net Buying of Rs. 807.56 Crore was witnessed in Others
Trades, whereas, Net Selling of Rs. 51.76 Crore and of Rs. 292.57 Crore was witnessed in Mutual Funds and Proprietory
Trades.
In F&O Segment Net Buying of Rs. 1581.59 Crore, of Rs. 861.72 Crore and of Rs. 28.40 Crore was witnessed in Index Futures,
Index Options and Stock Options, respectively,
whereas, Net Selling of Rs. 34.61 Crore was witnessed in Stock
Futures Segment.
NIFTY OCT FUTURE ended at a Premium of 10.55
Points to the Spot NIFTY.
A view on some of the NIFTY 50 Stocks for TOMORROW:
AXISBANK: Can touch the levels of 1055/1065, if crosses the level of 1035.
BHEL: Can touch the levels of 330/332, if crosses the level of 325.
IDFC: Can touch the levels of 118/120, if crosses the level of 116.
JINDALSTL: Can touch the levels of 491/495, if crosses the level of 485.
AMBUJACEM: Can dip to the levels of 143/142, if breaches the level of 145.
BHARTIARTL: Can dip to the levels of 348/345, if breaches the level of 355.
For the week, resistance for NIFTY comes at 5010 & 5120 levels. At the same time, 4720 & 4650 will act as major support levels.
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