Nifty Outlook for 17th October 2011

On Friday, NIFTY made a White Candlestick Pattern. NIFTY registered a weak opening with almost 20 points and within seconds marked the intraday low of 5056.60.  However, the key indices made a stronger move upwards on back of optimistic view on RIL Q2 numbers, due on Oct 15, 2011. Later, reports that the economic slowdown has hit the realty sector in Mumbai, realty stocks edged lower dragging the bourses back in red. Nevertheless, the key indices surpassed even these losses and re-entered the positive terrain immediately. Since then, the gauges were seen trading strong for most part of the session, hitting intraday highs minutes before the closing bell. NIFTY touched the level of 5141.40 as the intraday high, but could not cross the crucial resistance of 5150. METAL, CAPITAL GOODS and REALTY & INFRA were the top losers for the day, whereas, IT, OIL & GAS and FMCG were the sectors which led the market to touch new highs for the day. Finally, for the day NIFTY managed to close at 5132.30, above the levels of 5100, which gave a sigh of relief to the traders having long positions in the market.    

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) and 50-Days SMA (Simple Moving Average) of 4986.75 and 5018.93, respectively on closing basis. It is trading much below its 200-Days SMA of 5459.66. 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 by marking a high of 5141.40 for the day and also closed above it at 5132.30. It has got reverted from this level for the thrice and has crossed it again for the fourth time. 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. 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.

On the Economic Front, CHINA will be coming out with its FDI – Foreign Direct Investment for the month of September. Industrial Production and Capacity Utilization for the month of August will be announced in JAPAN. US will be coming out with Industrial Production, Capacity Utilization for the month of September and NY Empire Manufacturing Index 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. HDFC, INGVYSYABANK, MAHINDRALIFE, MINDTREE, PERSISTENT, SOUTHBANK, TCS and ZEEL will be announcing their Results in INDIA. CITIGROUP INC and INTERNATIONAL BUSINESS MACHINES CORP 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 4986.75 and 5018.93, respectively on closing basis. It is trading much below its 200-Days SMA of 5450.66. 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 57.67 and 50.85, respectively, showing a short term positive crossover.

2. MACD (26 Days & 12 Days): Their Values are 32.40 and 45.29, respectively. A short term positive crossover is indicated by both the Moving Averages.

3. +DI: 27.81, -DI: 22.69, ADX: 16.15: 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 5450.66, 5018.93 and 4986.75.

Some Trading Stats of the Friday’s (14^th October, 2011) Trading Session:

Net Selling of Rs. 94.04 Crore in Cash and of Rs. 298.46 Crore in F&O Segment by FIIs was witnessed on Friday’s Trading Session.

Net Selling of Rs. 74.64 Crore and of Rs. 781.20 Crore was witnessed in Mutual Funds and Proprietory Trades, respectively, whereas, Net Buying of Rs. 528.04 Crore was witnessed in Others Segment.

In F&O Segment Net Buying of Rs. 83.47 Crore, of Rs. 8.91 Crore and of Rs. 3.95 Crore was witnessed in Index Futures, Index Options and Stock Options, respectively, while, Net Selling of Rs. 394.80 Crore was witnessed in Stock Futures.

NIFTY OCT FUTURE ended at a Premium of 11.05 Points to the Spot NIFTY.

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

BAJAJ-AUTO:   Can touch the levels of 1650/1660, if crosses the level of 1635.

BHARTIARTL:    Can touch the levels of 390/392, if crosses the level of 385.

HCLTECH:         Can touch the levels of 448/452, if crosses the level of 440.

TCS:                 Can touch the levels of 1160/1170, if crosses the level of 1140.

COALINDIA:      Can dip to the levels of 316/313, if breaches the level of 322.

For the day, intraday resistance for NIFTY comes at 5150 / 5180 / 5220 levels. At the same time, 5090 / 5050 / 5020 will act as major intraday support levels.