Nifty Weekly Outlook (17th to 21st October 2011)

From 4888.05 to 5132.30, NIFTY gained almost 244.25 points and ended in Green last week on Friday (14th October 2011) at 5132.30 gaining almost around 5.00% as compared to the last week’s closing of 4888.05. For whole of the week, NIFTY headed towards north, supported by short covering and buying appearing in some the sectors and stocks at the lower level. Markets all over the Globe were relieved due to positive news flows from the European Markets. Last week was not much eventful, but two important Economic Data were announced in the Indian Markets. India's IIP for the month of August 2011 grew at 4.1% against 3.3% a month ago. IIP Data were below the Market Expectations of 5%. Growth in factory output, as measured in terms of the Index of Industrial Production (IIP), stood at 4.50% in August last year. During the April-August period this fiscal, IIP growth stood at 5.60%, as against 8.70% in the same period last year. Meanwhile, the IIP growth figure for July this year has been revised upward to 3.80% from the provisional estimate of 3.30%. Inflation, as measured by the Wholesale Price Index (WPI), stood at 9.78% in August. The rate of price rise was recorded at 8.98% in September, 2010. Both of the data were negative for the Indian Economy, but markets didn’t react to them. Apart from the economic data, Q2 FY11 Results Season also began last week with the Big Boy INFY announcing it the first. The results were better than the market expectations, which led the IT sector zooming for the last week. BANKING, FINANCE, METAL, TEXTILE, AUTO, CONSUMER DURABLES, IT, OIL & GAS, POWER and REALTY & INFRA GOODS witnessed a Buying interest and helped NIFTY to the mark a high of 5141.40 on the last trading day of the week itself. For the week, NIFTY made a low of 4882.05 and did not breach the level of 4880. Finally after witnessing a total News and Data driven movement for whole of the week, it ended at 5132.30.

Technically, NIFTY has made a Long White Candlestick Pattern, which completely engulfed last seven week’s candles into it. If a look at chart is taken, NIFTY seems to be moving in a range since last seven weeks and at the same time a negative crossover between 100-Days SMA (Simple Moving Average) and 40-days EMA (Exponential Moving Average) is witnessed. An Extension Level is being drawn from the Low of 2539.45 (week ended 06^th March, 2009) to the life-time high of 6338.50 (week ended 05^th November, 2010), which represents that NIFTY is taking support of its 38.20% Retracement level of 4887.26. It has already breached its 23.60% level of 5441.92. A Positive Divergence can also be witnessed in sync with RSI (Relative Strength Index), which signals a northbound movement in the markets in the coming weeks. 5200 is a Crucial Resistance for NIFTY to cross on the closing basis, which proved right thrice. NIFTY is trading below its 40-Days EMA and 100-Days SMA of 5332.81 and 5416.87, respectively.

Unless, NIFTY gives a positive closing above the levels of 5200, Investors are suggested to avoid making investment in the Markets right now and wait for the right direction for the market and Traders are suggested to trade with the market trend in the markets by following Strict Stop Losses.

If a look at International Markets is taken, all the Markets around the Globe turned positive. Asian Indices turned from their 52-week lows, while, European and American Indices gained exorbitantly for the second week.  

FIIs (Foreign Institutional Investors) were the Net Buyers of Rs. 1496.91 Crore in Cash, while DIIs (Domestic Institutional Investors) were the Net Sellers of Rs. 530.72 Crore in the same segment for the last week.

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 next week in India. MINDTREE, MAHINDRALIFE, SOUTHBANK, ZEEL, HDFC, IFCI, TCS, HDFC, INGVYSYABANK, MAHINDRALIFE, MINDTREE, PERSISTENT, SOUTHBANK, TCS, CHAMBLFERT, JINDALSTEL, PETRONET, HCLTECH, ABIRLANUVO, JETAIRWAYS, HINDZINC, HDFCBANK, RAYMOND, CROMPGREAV, DISHTV, IDBI, YESBANK, MRF, CAIRN, BIOCON, PIRHEALTH, EXIDEIND, ARVIND, UNIPHOS, IDEA, LITL, LT, FEDERALBNK, RCF, HCC and JSWSTEEL will be announcing their Results.

On the Global front, in ASIA, China comes under scrutiny this week as Beijing prepares to release the latest GDP data, with economists expecting a mild slowing. Meanwhile, costly flooding could prompt a surprise interest-rate cut in Thailand. In EUROPE, data on German business sentiment as well as earnings reports from numerous companies, including Nokia and Ericsson are much awaited. In US, IBM, Apple, Intel, eBay, Microsoft, Citigroup, and Bank of America, as well as RIM's developers conference and of course - the latest out of Europe will be in focus.

For the week, resistance for NIFTY comes at 5260 & 5320 levels. At the same time, 4880 & 4720 will act as major support levels.