Nifty Outlook for 26th December 2011

On Friday, NIFTY made a Black Opening Marubozu Candlestick Pattern. This formation suggests that it was a day for bears and such a bearish rally should cause concern among the bulls. Equities ended a choppy session with negative bias, reflecting losses in OIL & GAS, BANKING, CONSUMER DURABLES and PSU stocks. An upbeat Asian market trend ensured a strong opening and NIFTY registered a positive opening of 25-30 points. However, bears rushed in full force to pull the market lower within half just an hour. NIFTY marked a low of 4693.20 for the day. The negative trend, nevertheless, lasted for a short span as buying emerged from several pockets which lasted until late afternoon. Amidst the volatility, investors marched towards the fence an hour before closing bell, taking profit off the table, ahead of the Christmas and New Year festive season. For the day, NIFTY closed at 4714.

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 28-Months Low marked 4531.15 by NIFTY (21^st December, 2011). 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 on closing basis, which was till now acting as a good support level. It is becoming really tough for NIFTY to make a proper ground to land on. The level of 4450 will now act as the strong support level on closing basis for NIFTY, whereas the level of 4800 is the immediate resistance for NIFTY 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, JAPAN will be coming out with its Corporate Service Price for the month of November. Hometrack Housing Prices for the month of December will be announced in UK.

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 5298.66, 4978.18 and 4789.38, 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 43.08 and 40.32, respectively. The indicator is moving towards oversold zone from the overbought zone. 

2. MACD (26 Days & 12 Days): Their Values are 72.06 and 60.36, respectively. A short term negative crossover is indicated by both the Moving Averages.

3. +DI: 20.39, -DI: 26.13, ADX: 22.01: 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 5298.66, 4978.18 and 4789.38, respectively.

Some Trading Stats of the Monday’s (26^th December, 2011) Trading Session:

Net Buying of Rs. 84.27 Crore in Cash while Net Selling of Rs. 24.55 Crore in F&O Segment by FIIs was witnessed on Monday’s Trading Session.

Net Buying of Rs. 945.05 Crore was witnessed in Others Segment, whereas, Net Selling of Rs. 53.27 Crore and of Rs. 758.05 Crore was witnessed in Mutual Funds and Proprietory Trades, respectively.

In F&O Segment Net Buying of Rs. 78.96 Crore and of Rs. 3.74 Crore was witnessed in Index Futures and Index Options, respectively, whereas, Net Selling of Rs. 101.23 Crore and of Rs. 6.02 Crore was witnessed in Stock Futures and Stock Options, respectively.

NIFTY DEC FUTURE ended at a Premium of 6.50 Points to the Spot NIFTY.

For the day, intraday resistance for NIFTY comes at 4750 / 4780 / 4820 levels. At the same time, 4680 / 4650 / 4620 will act as major intraday support levels.