Nifty Weekly Outlook (28th November to 02nd December 2011)

From 4905.80 to 4710.05, NIFTY lost almost 195.75 points and ended in Red last week on Friday (25^th November 2011) at 4710.05 losing almost around 4.16% as compared to the last week’s closing of 4905.80. It was a Bloodbath for the whole week on the Dalal Street. A lifetime low on the rupee, the spillover effect of the eurozone crisis and poor internal fundamentals ensured that the week was packed with volatility. Bad news for the market continued, causing Indian equities to tank around 4% despite several short covering rallies before the expiry of the November series. The Cabinet cleared the bill to increase foreign direct investment to 51% in multi-brand retail and 100% in single brand, bringing joy to the Indian retail sector. On the flip side, the depreciating rupee has had a very adverse effect on the economy. After touching its lifetime high of 52.73 per dollar on Tuesday, central bank intervention at 52.55 per dollar levels has helped appreciate the dollar a little. However, the Indian currency is still the worst performing Asian currency, having depreciated over 17% since July 2011. RBI gave a nod to restructuring the beleaguered airline’s debt on the conditions that the restructuring be done within 120 days after getting the sanction of all banks involved. The RBI has also said that the repayment period for the loans should be extended to 15 years from the current 10 years. So it can be said it was a Stock Specific and Sector Specific action too witnessed in the last week. Although for the week NIFTY made a high of 54873.80, but it kept on slipping and breaching its weekly support levels of 4750 and 4650 too very swiftly. China’s factory sector shrank the most in 32 months in November as new orders slumped, reviving worries that China may be skidding towards an economic hard landing and fuelling global recession fears. European Debt Crisis fear spread to the countries like Austria, Hungary too. Italy, Greece and Spain are in the worst conditions as of now also their 10-Year Bond Yield is touching new and unbearable heights pinching more. FITCH also said in a report that the US Banks will have a Contagion Effect if the European Countries soon do not solve their problem. Finally after witnessing a volatile and shaky movement for whole of the week, it ended at 4710.05.

Technically, NIFTY has made a Black Opening Marubozu Candlestick Pattern, signaling it a week for bears and such a bearish rally should cause concern among the bulls. If a look at Chart is taken, 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 was taking support of its 38.20% Extension level of 4887.26 since the month of September. Last week NIFTY breached this support by closing much below it at 4710.05. It marked a low of 4639.10, again breaching important weekly support levels of 4750 and 4650. The upper trendline marked from November, 2010 is now acting as an important resistance for NIFTY. NIFTY is trading below its 40-Days EMA and 100-Days SMA of 5263.71 and 5417.80, respectively. Another sell off driven by deepening European Debt Crisis may drag NIFTY to the levels of 4450 too (50% Extension Level marked from the high of 6338.50).

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 again reverted from their resistances as in the case of Indian Markets. Some of them even breached and touched their important Support Levels. Deepening fear of European Debt Crisis was the major reason of this Sell Off all around the Globe.

FIIs (Foreign Institutional Investors) were the Net Sellers of Rs. 805.00 Crore while DIIs (Domestic Institutional Investors) were the Net Buyers of Rs. 1036.55 Crore, in Cash Segment for the last week.

On the Global front, in Europe, The spotlight will remain on the euro-zone sovereign debt markets next week, with several countries scheduled to hold bond auctions. In US, The coming week will bring reaction to the latest from Europe, retail sales and jobs data.

For the week, resistance for NIFTY comes at 4820 & 4900 levels. At the same time, 4580 & 4500 will act as major support levels.