Nifty Outlook for 12th October 2011

Yesterday, NIFTY made a Short Black Candlestick Pattern. Choppy afternoon trade saw the key indices write-off their early morning gains to end in the negative terrain. Markets kick-started trade on a strong note owing to positive global cues with NIFTY witnessing a Gap Up opening of almost 40 points. After opening with a Gap, NIFTY made a high of 5045.10 for the day, but could not cross or even touch the level of 5050.  However, just as it appeared that the bulls will continue their northward march, as has been the case in the previous few sessions, the upmove lost momentum. The bourses then made several peaks and troughs throughout the morning session. The troughs, however, were more prominent that the peaks. NIFTY hit the low of 5000 twice in the session. Sentiment deteriorated further in the afternoon session owing to a weak opening of the European markets. Though the markets recovered from the blow, they however, had run out of gas and fell prey to the volatility. NIFTY fell into the negative terrain during the penultimate hour of trade and made an intraday low in the closing moments of 4964.00. IT Sector was the biggest loser for the day, ahead of INFY’s Q2 FY11 Results. Finally, for the day NIFTY managed to close at 4974.35, closer to the day’s low level.   

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. NIFTY has crossed its 20-Days EMA (Exponential Moving Average) of 4945.58 on closing basis and also touched its 50-Days SMA (Simple Moving Average) of 5042.47 by marking a high of 5045.10, but closed below it at 4974.35. 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 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 Tertiary Industry Index for the month of August and Preliminary Machine Tool Orders for the month of September. Foreign Exchange Reserves and FDI – Foreign Direct Investment for the month of September will be announced in CHINA. GERMANY will be announcing its Wholesale Price Index for the month of September. ILO Unemployment Rate, Average Earnings for the month of August, Claimant Count Rate and Claimant Count Change for the month of September will be announced in UK. EUROPEAN MONETARY UNION will be coming out with its Industrial Production for the month of August. MBA Mortgage Applications will be announced in US. INDIA will be coming out with the IIP (Index of Industrial Production) Data for the month of August.

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.

A more Sector Specific and Stock Specific action would be witnessed in the markets now, as India Inc. will be coming out with its Q2 FY11 Results. INFY will be announcing its results tomorrow, hence, traders are suggested to focus on IT sector as a whole.

NIFTY has crossed its 20-Days EMA (Exponential Moving Average) of 4945.58 on closing basis and also touched its 50-Days SMA (Simple Moving Average) of 5042.47 by marking a high of 5045.10, but closed below it at 4974.35. Still it is trading much below its 200-Days SMA of 5464.06. 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 50.19 and 45.49, respectively, showing a short term positive crossover.

2. MACD (26 Days & 12 Days): Their Values are 81.35 and 45.27, respectively. A short term positive crossover is indicated by both the Moving Averages.

3. +DI: 27.27, -DI: 26.52, ADX: 17.62: 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 these indicators are 5464.06, 5042.47 and 4945.58.

Some Trading Stats of the Tuesday’s (11^th October, 2011) Trading Session:

Net Buying of Rs. 114.15 Crore in Cash and of Rs. 1317.80 Crore in F&O Segment by FIIs was witnessed on Tuesday’s Trading Session.

Net Selling of Rs. 211.75 Crore and of Rs. 703.43 Crore was witnessed in Mutual Funds and Others Trades, respectively, whereas, Net Buying of Rs. 445.63 Crore was witnessed in Proprietory Trades.

In F&O Segment Net Buying of Rs. 631.45 Crore, of Rs. 863.33 Crore and of Rs. 2.47 Crore was witnessed in Index Futures, Index Options and Stock Futures, respectively, while, Net Selling of Rs. 179.45 Crore was witnessed in Stock Futures.

NIFTY OCT FUTURE ended at a Premium of 8.10 Points to the Spot NIFTY.

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

BAJAJ-AUTO:   Can touch the levels of 1620/1630, if crosses the level of 1585.

NTPC:              Can touch the levels of 178/180, if crosses the level of 176.

For the day, intraday resistance for NIFTY comes at 4990 / 5020 / 5050 levels. At the same time, 4950 / 4920 / 4880 will act as major intraday support levels.