Nifty Outlook for 10th January 2012

Yesterday, NIFTY made a Hammer Candlestick Pattern. This pattern has been formed in a very range bound market, which does not suggest whether it is a Bullish pattern or Bearish. NIFTY witnessed a negative opening with very mild losses and then traded in the southward direction in the early session. It marked a low of 4695.45 for the day. It breached the level of 4720 and 4700 too in intraday trading. However, making a number of crests and troughs, NIFTY moved slowly towards greener pastures and made the intraday high of 4758.70, recovering almost 63 points from the day’s low level. But it could not even touch or cross the level of 4800 again for the sixth time. Sellers pulled down NIFTY in red once more, and the market ended with minor losses. POWER, REALTY & INFRA and CAPITAL GOODS were the sectors to close in Green for the day, whereas, OIL & GAS, AUTO, FMCG and IT Sectors were the major losers for the day. Finally, NIFTY ended at 4742.80 for the day.

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 crossed its 20-Days EMA yesterday, on the closing basis, but it is still trading below its 50-Days SMA. 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 4550 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, so that Investors can be allowed to enter into the markets. 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, CHINA will be coming out with its Trade Balance for the month of December. BRC Retail Sales Monitor and RICS Housing Price Balance for the month of December will be announced in UK. US will be announcing its Wholesale Inventories for the month of November and IBD/TIPP Economic Optimism for the month of January.

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 has crossed its 20-Days EMA (Exponential Moving Average) of 4745.01 on closing basis, but it is still trading below its 200-Days SMA (Simple Moving Average) and 50-Days SMA of 5253.56 and 4886.96, 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 47.86 and 46.49, respectively. The indicator is moving towards oversold zone from the overbought zone. 

2. MACD (26 Days & 12 Days): Their Values are 32.44 and 63.04, respectively. A short term negative crossover is indicated by both the Moving Averages.

3. +DI: 19.97, -DI: 27.09, ADX: 14.89: 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 has crossed its 20-Days EMA on the closing basis yesterday, but it is still trading below its 200-Days SMA and 50-Days SMA on closing basis. These indicators are at the levels of 5253.56, 4886.96 and 4745.01, respectively.

Some Trading Stats of the Monday’s (09^th January, 2012) Trading Session:

Net Selling of Rs. 36.46 Crore in Cash and of Rs. 266.94 Crore in F&O Segment by FIIs was witnessed on Monday’s Trading Session.

In F&O Segment Net Selling of Rs. 387.57 Crore and of Rs. 16.18 Crore was witnessed in Stock Futures and Stock Options, respectively, whereas, Net Selling of Rs. 107.69 Crore and of Rs. 29.12 Crore was witnessed in Index Futures and Index Options, respectively.

NIFTY JAN FUTURE ended at a Premium of 9.00 Points to the Spot NIFTY.

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

AXISBANK:       Can touch the levels of 876/878, if crosses the level of 860.

CIPLA:             Can touch the levels of 352/355, if crosses the level of 345.

GRASIM:          Can touch the levels of 2495/2505, if crosses the level of 2450.

JPASSOCIAT:    Can touch the levels of 55/55.20, if crosses the level of 53.50.

SIEMENS:         Can touch the levels of 692/695, if crosses the level of 680.

BAJAJ-AUTO:   Can dip to the levels of 1400/1390, if breaches the level of 1420.

Pre Market Calls:

CANBK: Buy ONLY IF IT TRADES ABOVE 400 for the TARGETS of 410/416, with the STRICT SL of 395.

BGRENERGY: Buy ONLY IF IT TRADES ABOVE200 for the TARGETS of 208/212, with the STRICT SL of 197.40.

For the day, intraday resistance for NIFTY comes at 4780 / 4820 / 4850 levels. At the same time, 4720 / 4680 / 4650 will act as major intraday support levels.