Nifty Outlook for 18th November 2011

Yesterday, NIFTY again made a Long Black Candlestick Pattern, signaling panic or capitulation as it has appeared after a long decline. It has been a 4-days losing streak for NIFTY. The market kick-started trade on a flat but negative note and remained range-bound throughout the morning session. NIFTY tested the positive terrain during the last hour of morning session on reports that food inflation eased to 10.63% for the week ended November 5 from 11.81% in the previous week. For the same period, fuel group inflation came in at 15.49% versus 14.5%, week-on-week. Primary articles inflation was at 10.39% versus 11.43%. NIFTY however shunned choppy trade towards the later part of the session and fell miserably as European concerns resurfaced. Sentiments dampened after the European markets fell over 1% in trade. To add to this, rating agency Moody’s downgraded 12 German public sector banks the day before on concerns that they are likely to receive less federal government support if needed. NIFTY dipped almost 115 points from the day’s high of 5036.80 and marked a low of 4919.45. In the morning session the level of 5000 was acting as an excellent intraday support for it, but when a sharp selloff was witnessed it also breached another crucial support of 4950. Volumes were almost absent from the markets, hence it can be said that it was a total panic driven selling. Equities nosedived on Thursday, triggered by a sharp sell-off in refineries, power, metal, capital goods stocks amid rising concerns that the euro-zone debt crisis may be spreading. OIL & GAS, POWER and METAL were the sectors which drag down the markets. For the day NIFTY ended at 4934.75, below the crucial level of 4950.

Technically, a Negative Crossover between 200-Days SMA (Simple Moving Average) and 50-Days SMA is still intact. Both the 50-Days SMA and 20-Days EMA have given a Positive Crossover, as the short term moving average has crossed the longer term average. NIFTY is once again trading much below its 20-Days EMA, 50-Days SMA and 200-Days SMA. A Fibonnaci Retracement Level is being drawn from the High of 6338.50 (08^th November, 2010) to the 18-Months Low marked 4720.00 by NIFTY (26^th August, 2011). Yesterday, NIFTY has again slipped below the level of 61.80% level of 5101.97 on closing basis. As mentioned earlier, that the breaching of 61.80% of the Fibonnaci Retracement marked frrm the high of 6338.50 to the low of 4720.00, signals that NIFTY can again witness a dip to the level of 5000/4950, NIFTY successfully achieved the level of 4950 on closing basis. Now there is a high probability that NIFTY may also further dip to the level of 4800/4720. Still the markets all over the Globe are doubtful about the clarity of the European Debt Crisis. A positive action is being eagerly awaited from PIIGS Countries all around the Globe. 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.   

On the Economic Front, GERMANY will be coming out with its Producer Price Index for the month of October. Leading Indicators 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.

NIFTY is once again trading below all its moving averages of 20-Days EMA (Exponential Moving Average), 50-Days SMA (Simple Moving Average) and 200-Days SMA of 5132.37, 5067.10 and 5376.75, respectively. The 14-Days RSI (Relative Strength Index) is heading towards its oversold zone from the overbought zone and 26-Days MACD (Moving Average Convergence and Divergence) has given a negative crossover.

What does Indicators Say?

                             

1. RSI (14 Days & 9 Days): The values are 36.55 and 48.08, respectively. The indicator is moving towards oversold zone from the overbought zone. 

2. MACD (26 Days & 12 Days): Their Values are 41.44 and 94.48, respectively. A short term negative crossover is indicated by both the Moving Averages.

3. +DI: 21.34, -DI: 33.63, ADX: 16.36: The Negative Directional Index has gained strength over the Positive 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, 20-Days EMA and 50-Days SMA. These indicators are at the levels of 5376.75, 5067.10 and 5132.37, respectively.

Some Trading Stats of the Thursday’s (17^th November, 2011) Trading Session:

Net Selling of Rs. 195.20 Crore in Cash and of Rs. 239.20 Crore in F&O Segment by FIIs was witnessed on Thursday’s Trading Session.

Net Selling of Rs. 231.13 Crore and of Rs. 1548.22 Crore was witnessed in Mutual Funds and Proprietory Trades, respectively, whereas, Net Buying of Rs. 1495.24 Crore was witnessed in Others Trades.

In F&O Segment Net Selling of Rs. 1076.00 Crore was witnessed in Index Futures, whereas, Net Buying of Rs. 635.77 Crore, of Rs. 200.16 Crore and of Rs. 0.88 Crore was witnessed in Index Options, Stock Futures and Stock Options, respectively.

NIFTY NOV FUTURE ended at a Discount 1.80 Points to the Spot NIFTY.

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

AMBUJACEM:    Can dip to the levels of 150/148, if breaches the level of 153.

DRREDDY:        Can dip to the levels of 1535/1525, if breaches the level of 1550.

IDFC:                Can dip to the levels of 106/105, if breaches the level of 108.

RANBAXY:        Can dip to the levels of 443/440, if breaches the level of 453.

RELIANCE:        Can dip to the levels of 795/790, if breaches the level of 810.

For the day, intraday resistance for NIFTY comes at 4950 / 4980 / 5020 levels. At the same time, 4880 / 4850 / 4820 will act as major intraday support levels.