Nifty Outlook for 25th October 2011

Yesterday, NIFTY made a Small Candlestick Pattern. Equities rose sharply, as investors took positions in auto, IT, oil & gas and FMCG stocks. After a bright start on the auspicious occasion of Dhanteras, the benchmark indices tested new highs on strong capital inflows across all sectors. A strong trend across Asian peers and positive closing of the US markets on Friday aided the domestic uptrend. NIFTY registered a Gap Up Opening of almost 65 points and continued its northward movement, marking a high of 5145.65 for the day. However, the market trimmed gains in mid-afternoon trade as European stocks moved off initial highs after the preliminary composite purchasing manager’s index for the euro zone fell to 47.2 in October 2011. The bourses, which were highly range-bound with a positive bias during the early hours, witnessed strong bout volatility in the later half of the session. Fears of an impending rate hike by the Reserve Bank of India (RBI) ahead of tomorrow’s credit policy meet failed to spoil the party at Dalal Street. Till the first half of trading session, NIFTY remained range-bound between 5145.65 and 5084.75 levels. In the second half of trading session, it marked a low of 5084.75, but did not breach the crucial intraday support of 5080. AUTO Sector was the major gainer; while CAPITAL GOODS Sector was the biggest laggard. Finally, for the day NIFTY managed to close at 5098.35, just below the level of 5100.

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. 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 5032.60 and 4997.71, 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. 20-Days EMA is also acting as a Good Support Level for Nifty since last four trading sessions. NIFTY is trading much below its 200-Days SMA of 5420.35. 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 is again struggling with this level; however, it closed below it at 5098.35 yesterday, but marked a high of 5145.65 for the day. It has got reverted from this level four times and has crossed it again for the fifth 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.

A very volatile session can be witnessed tomorrow with a negative bias as it will the F&O Expiry Trading Session for the month of October and Reserve Bank of India (RBI) will be coming out with its Credit Policy Review.

On the Economic Front, JAPAN will be coming out with its Corporate Service Price for the month of September. Gfk Consumer Confidence Survey for the month of November will be announced in GERMANY. UK will be announcing its Q2 Current Account, BBA Mortgage Approvals for the month of September. S&P/Case-Shiller Home Price Indices and Housing Price Index for the month of August, Richmond Fed Manufacturing Index and Consumer Confidence for the month of October will be announced in US.  

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. APIL, BASF INDIA, DRREDDY, ENGINERSIN, KEC INTL, KOTAKBANK, MIRC ELECT, NTPC, OFSS and SESAGOA will be announcing their Results in INDIA. DEUTSCHE BANK AG will be announcing its Q3 FY11 Results in GERMANY. RECKITT BENCKISER GROUP PLC will be announcing its Q3 FY11 Results in UK. XEROX CORP, CUMMINS INC, DELTA AIR LINES INC and AMAZON.COM 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 5032.60 and 4997.71, respectively on closing basis. It is trading much below its 200-Days SMA of 5420.35. 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 54.14 and 53.10, respectively, showing a short term positive crossover.

2. MACD (26 Days & 12 Days): Their Values are 59.08 and 3.34, respectively. A short term positive crossover is indicated by both the Moving Averages.

3. +DI: 27.55, -DI: 21.37, ADX: 13.73: 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 5420.35, 4997.71 and 5032.60, respectively. 

Some Trading Stats of the Monday’s (24^th October, 2011) Trading Session:

Net Buying of Rs. 101.10 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. 599.43 Crore and of Rs. 1034.85 Crore was witnessed in Proprietory Trades and Others Segment, respectively, while, Net Buying of Rs. 189.71 Crore was witnessed in Mutual Funds.

In F&O Segment Net Buying of Rs. 917.20 Crore, of Rs. 22.54 Crore and of Rs. 41.74 Crore was witnessed in Index Futures, Stock Futures and Stock Options, respectively, while, Net Selling of Rs. 245.20 Crore was witnessed in Index Options.

NIFTY OCT FUTURE ended at a Premium 7.45 Points to the Spot NIFTY.

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

HINDUNILVR:     Can touch the levels of 346/348, if crosses the level of 338.

RPOWER:          Can touch the levels of 91/92, if crosses the level of 89.

TCS:                 Can touch the levels of 1100/1110, if crosses the level of 1080.

For the day, intraday resistance for NIFTY comes at 5120 / 5150 / 5180 levels. At the same time, 5050 / 5020 / 4980 will act as major intraday support levels.