Nifty Outlook for 19th October 2011

Yesterday, NIFTY made a Black Candlestick Pattern, with a longer lower shadow representing NIFTY closed much above the day’s low level. Lower-than-expected Q2 result by TCS, coupled with negative global markets saw the bourses in red at the opening bell. NIFTY marked a Gap Down Opening of almost 70 points.  Not very impressive quarterly result posted by HCL Tech, too saw major selling in the IT space, which in turn kept adding gradual losses on NIFTY. The index heavyweight Reliance Industries also extended its last session’s losses on back of weak Q2 operating performance, which further weakened the market sentiment. Later, NIFTY slipped further in red triggered by a percent's fall on the European markets and hit the bottom at 5011.05 for the day. NIFTY did not breach the level of 5000 for the day. Though the market came off the lower levels, it continued to trade with losses till the closing bell. IT and REALTY & INFRA were the biggest losers for the day, and other Stock Specific and Sector Specific movement was witnessed due to Results Season. Finally, for the day NIFTY managed to close at 5037.50, much above the low point of the day and also above the crucial support of 5000 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) and 50-Days SMA (Simple Moving Average) of 5002.91 and 5004.81, respectively on closing basis. Both these averages are on the verge of giving a Positive Crossover (20-Days EMA is about to cross the 50-Days SMA from downside). It is trading much below its 200-Days SMA of 5441.15. 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. Yesterday, NIFTY has again reverted from this level for the fourth time, yesterday; it opened much below it and closed at 5037.50. 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, JAPAN will be coming out with its All Industry Activity Index for the month of August. Current Account and Construction Output for the month of August will be announced by EUROPEAN MONETARY UNION. US will be coming out with MBA Mortgage Applications, Consumer Price Index, Building Permits and Housing Starts 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.

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. AJMERARLTY, BAJAJFINSERV, BIOCON, CROMPGREAV, DISHTV, ESSAR PORTS, HDDFCBANK, HINDZINC, IGL, JBCHEM, KIRL INDUS, MASTEK, RAYMOND, TORRNTPOWER and WWIL will be announcing their Results in INDIA. MORGAN STANLEY, eBAY INC and AMERICAN EXPRESS CO 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 5002.91 and 5004.81, respectively on closing basis. It is trading much below its 200-Days SMA of 5441.15. 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 51.73 and 51.97, respectively, showing a short term positive crossover.

2. MACD (26 Days & 12 Days): Their Values are 14.01 and 34.46, respectively. A short term positive crossover is indicated by both the Moving Averages.

3. +DI: 25.71, -DI: 24.88, ADX: 14.86: 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 5441.15, 5004.81 and 5002.91.

Some Trading Stats of the Tuesday’s (18^th October, 2011) Trading Session:

Net Selling of Rs. 285.19 Crore in Cash and of Rs. 222.15 Crore in F&O Segment by FIIs was witnessed on Tuesday’s Trading Session.

Net Selling of Rs. 931.23 Crore was witnessed in Proprietory Trades, whereas, Net Buying of Rs. 19.78 Crore and of Rs. 1217.65 Crore was witnessed in Mutual Funds and Others Segment.

In F&O Segment Net Buying of Rs. 311.02 Crore and of Rs. 15.69 Crore was witnessed in Index Options and Stock Options, respectively, while, Net Selling of Rs. 229.42 Crore and of Rs. 319.44 Crore was witnessed in Index Futures and Stock Futures, respectively.

NIFTY OCT FUTURE ended at a Premium 7.40 Points to the Spot NIFTY.

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

COALINDIA:      Can touch the levels of 338/340, if crosses the level of 330.

HCLTECH:         Can dip to the levels of 392/390, if breaches the level of 400.

For the day, intraday resistance for NIFTY comes at 5080 / 5120 / 5150 levels. At the same time, 4980 / 4950 / 4920 will act as major intraday support levels.