Nifty Outlook for 11th January 2012

Yesterday, NIFTY made a Long White Candlestick Pattern after the formation of a Hammer Candlestick Pattern the day before yesterday and at the same time it moved out from its consolidation phase after whole one month. NIFTY witnessed a Gap Up opening of almost 30 points backed by Positive Global Cues. After few minutes of opening NIFTY stood above the level of 4800, which was acting as a very sticky level for it since last one month. For whole of the day, NIFTY maintained well above the levels of 4800 and lifted more above it after the robust opening and move of European Markets. A second push for the market was led by Moody’s, which upgraded India’s short-term foreign currency rating from speculative to investment grade, a development which may help domestic companies to raise funds from overseas markets at better rates. REALTY & INFRA and BANKING & FINANCE Sectors were the star performers for the day. Finally, NIFTY ended at 4849.55 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. The level of 4550 will now act as the strong support level on closing basis for NIFTY. The level of 4800 as mentioned earlier was acting as a strong resistance for NIFTY, since last one month, which it crossed successfully on the closing basis yesterday. Now, the level of 4950 (61.80% Level of Retracement) will act as an important resistance for it. 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 Leading Economic Index, Coincident Index, Current Account and Trade Balance for the month of November. Goods Trade Balance and Trade Balance for the month of November and BRC Shop Price Index for the month of December will be announced in U.K. GERMANY will be announcing its Real GDP Growth. Q3 Gross Domestic Product will be announced in EUROPEAN MONETARY UNION. U.S. will be announcing its MBA Mortgage Applications.

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 4754.96 on closing basis, but it is still trading below its 200-Days SMA (Simple Moving Average) and 50-Days SMA of 5250.74 and 4876.73, respectively. The 14-Days RSI (Relative Strength Index) and 26-Days MACD (Moving Average Convergence and Divergence) are now heading towards the overbought zone.

What does Indicators Say?

                                       

1. RSI (14 Days & 9 Days): The values are 56.31 and 48.46, respectively. The indicator is moving towards oversold zone from the overbought zone. 

2. MACD (26 Days & 12 Days): Their Values are 19.27 and 54.29, respectively. A short term negative crossover is indicated by both the Moving Averages.

3. +DI: 25.99, -DI: 24.62, ADX: 14.02: The Positive Directional Index has gained strength over the Negative 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 5250.74, 4876.73 and 4754.96, respectively.

Some Trading Stats of the Tuesday’s (10^th January, 2012) Trading Session:

Net Buying of Rs. 324.32 Crore in Cash and of Rs. 1438.63 Crore in F&O Segment by FIIs was witnessed on Tuesday’s Trading Session.

In F&O Segment Net Buying of Rs. 1054.37 Crore, of Rs. 321.81 Crore and of Rs. 93.00 Crore was witnessed in Index Futures, Index Options and Stock Futures, respectively, whereas, Net Selling of Rs. 30.55 Crore was witnessed in Stock Options.

NIFTY JAN FUTURE ended at a Premium of 20.75 Points to the Spot NIFTY.

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

AXISBANK:        Can touch the levels of 920/930, if crosses the level of 900.

BHEL:               Can touch the levels of 270/272, if crosses the level of 265.

DLF:                 Can touch the levels of 188/190, if crosses the level of 185.

ICICIBANK:        Can touch the levels of 790/792, if crosses the level of 775.

JINDALSTEL:     Can touch the levels of 510/512, if crosses the level of 500.

M&M:               Can touch the levels of 715/720, if crosses the level of 700.

RELIANCE:        Can touch the levels of 745/750, if crosses the level of 738.

RELINFRA:        Can touch the levels of 418/422, if crosses the level of 400.

Pre Market Calls:

ABB: Buy ONLY IF IT TRADES ABOVE 622 for the TARGETS of 635/640, with the STRICT SL of 614.

ADANIENT: Buy ONLY IF IT TRADES ABOVE 285 for the TARGETS of 292/296, with the STRICT SL of 281.

For the day, intraday resistance for NIFTY comes at 4880 / 4920 / 4950 levels. At the same time, 4820 / 4780 / 4750 will act as major intraday support levels.