Nifty Outlook for 19th December 2011

On Friday, NIFTY made a Long Black Candlestick Pattern, with a longer upper shadow. Market tried to mark a high but could not close near that mark and ended at the day’s low level. Irrespective of an optimistic start, the day turned out to be dark on the Dalal Street. NIFTY lost sheen during the last hour of trade and ended with losses over 2%. NIFTY ended at 25-months low mark. On the back of healthy global cues, recovery in rupee and positive expectations from the credit policy meet, the market opened in green. Thereafter, NIFTY kept rising and gained over 1%. Till the announcement of Monetary Policy, NIFTY kept trading above the level of 4750 and touched 4800 levels too. The RBI left key interest rates unchanged meeting market expectations. It said that it cannot say when the rate cuts will begin. The central bank in the credit policy meet today left the cash reserve ratio (CRR) unchanged at 6%. CRR is the minimum amount banks have to deposit with the RBI. Post the Reserve Bank of India (RBI) credit policy meet, market pared some of their initial gains and traded range-bound. It turned volatile for half an hour and immediately marked an intraday high of 4818.85. After trading range-bound for a while the market slipped in red following a loss of 1.5% on the rupee. But, this wasn’t the end of negative surprises. It was during the last hour of trade when profit booking barged into interest rate sensitive stocks, following which NIFTY fell over their face to its respective intraday low. It dipped almost 190 points from the day’s high level and touched 4628.20, breaching a crucial support of 4650. CAPITAL GOODS, REALTY & INFRA, BANKING & FINANCE and POWER Sectors were the biggest laggards for the day. NIFTY finally ended at 4651.60, just above the important support level of 4650.

Technically, a Negative Crossover between 200-Days SMA (Simple Moving Average) and 50-Days SMA is still intact. Even a Negative Crossover between the 50-Days SMA and 20-Days EMA has developed since, which signals selling pressure to creep in coming trading sessions. NIFTY has again dipped below its 20-Days EMA and 50-Days SMA on the closing basis. A Fibonnaci Retracement Level is being drawn from the High of 6338.50 (08^th November, 2010) to the 25-Months Low marked 4628.20 by NIFTY (16^th December, 2011). As mentioned in the report earlier “The lower trendline marked from the low of 4720 marked on 26^th August, 2011 is now acting as a Strong Support for NIFTY on closing basis, if it gets breach NIFTY may dip to the levels of 4750/4650 in the coming trading sessions”. On Friday, NIFTY after breaching these levels marked a 25-Months low of 4628.20 for the day. Still the investors should wait for fruitful results ahead and stay away from the markets. With deteriorating International Economic Scenario NIFTY even breached its important support level of 4650 in intraday trading, which was earlier touched in the Month of November. The level of 4650 is now acting as a good support level on the closing basis for NIFTY, whereas the level of 4800 is the immediate resistance for it on Closing Basis. Investors are suggested to avoid the markets to invest at this time; however, traders are suggested to take the advantage of Swing Trading, which will appear many times in between.   

On the Economic Front, UK will be coming out with its Rightmove House Price Index for the month of December. Current Account and Construction Output for the month of October will be announced by EUROPEAN MONETARY UNION. US will be announcing its NHB Housing Market Index for the month of December.

Weakening Rupee, Deteriorating European Economy Conditions, Uncertainties in Indian Corporate and Finance Scenario are acting as major triggers of the massive sell off, which is resulting in development of Fear among the Indian and International Investors. 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 again trading below all its moving averages. The 200-Days SMA (Simple Moving Average), 50-Days SMA and 20-Days EMA (Exponential Moving Average) is at 5316.96, 4997.02 and 4868.57, respectively. The 14-Days RSI (Relative Strength Index) and 26-Days MACD (Moving Average Convergence and Divergence) are now heading towards the oversold zone one again.

What does Indicators Say?

                                  

1. RSI (14 Days & 9 Days): The values are 34.85 and 41.12, respectively. The indicator is moving towards oversold zone from the overbought zone. 

2. MACD (26 Days & 12 Days): Their Values are 26.82 and 147.37, respectively. A short term negative crossover is indicated by both the Moving Averages.

3. +DI: 18.65, -DI: 30.58, ADX: 22.00: The Negative Directional Index has gained strength over the Positive Directional Index and the Average Directional Index is below 20, indicates that the market is in the trading range.

4. SMA (200 Days), SMA (50 Days) & EMA (20 Days): NIFTY is trading below the level of  200-Days SMA, but has crossed its 20-Days EMA and 50-Days SMA on closing basis. These indicators are at the levels of 5316.96, 4997.02 and 4868.57, respectively.

Some Trading Stats of the Friday’s (16^th December, 2011) Trading Session:

Net Selling of Rs. 220.25 Crore in Cash and of Rs. 1052.88 Crore in F&O Segment by FIIs was witnessed on Friday’s Trading Session.

Net Buying of Rs. 905.90 Crore was witnessed in Others Segment, whereas, Net Selling of Rs. 22.31 Crore and of Rs. 577.07 Crore was witnessed in Mutual Funds and Proprietory Trades, respectively.

In F&O Segment Net Buying of Rs. 611.14 Crore was witnessed in Index Futures, whereas, Net Selling of Rs. 1430.86 Crore, of Rs. 182.83 Crore and of Rs. 50.33 Crore was witnessed in Index Options, Stock Futures and Stock Options, respectively.

NIFTY DEC FUTURE ended at a Discount of 8.45 Points to the Spot NIFTY.

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

AXISBANK:        Can dip to the levels of 880/875, if breaches the level of 900.

ICICIBANK:        Can dip to the levels of 660/655, if breaches the level of 675.

JPASSOCIAT:    Can dip to the levels of 57.70/57, if breaches the level of 59.

LT:                  Can dip to the levels of 1050/1040, if breaches the level of 1070.

PNB:                Can dip to the levels of 810/805, if breaches the level of 828.

SBIN:                Can dip to the levels of 1650/1640, if breaches the level of 1675.

For the day, intraday resistance for NIFTY comes at 4680 / 4720 / 4750 levels. At the same time, 4620 / 4580 / 4550 will act as major intraday support levels.