Nifty Outlook for 12th January 2012

Yesterday, NIFTY made a Doji Candlestick Pattern. Doji is a particular signal showing indecision about the direction of the market and it represents a tug of war between buyers and sellers. The overall result is a standoff. It shows that neither the bulls nor the bears were able to gain control during the day and it is possible that a turning point can develop soon. NIFTY witnessed a positive opening of almost 10 points, extending the day before yesterday's rally after Moody’s upgraded India’s short-term ceiling on foreign-currency bank deposits to ‘investment grade’. The uptrend continued for most part of the day, though choppy, and struggling to strike a specific direction for the benchmarks. NIFTY hence marked a high of 4877.20 for the day, but it resisted at the levels of 4880 very strongly. A round of profit-booking around resistance levels, followed by a weak opening across European peers, pushed the NIFTY lower half an hour before the closing bell, hence it marked a low of 4841.60. Nonetheless, bulls made a comeback as buying emerged from various pockets, settling for the day with some gains in their kitty. REALTY & INFRA Sector was the biggest gainer for the day, whereas, IT Sector was the biggest loser. Finally, after a very stick session NIFTY ended at 4860.95 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 Money Supply M2+CD, Eco watchers Survey: Outlook, Eco Watchers Survey: Current and Machine Order Tools for the month of December. Consumer Price Index and Producer Price Index for the month of December will be coming out in CHINA. GERMANY will be announcing its Consumer Price Index for the month of December. Industrial Production and Manufacturing Production for the month of November, BOE Asset Purchase Facility for the month of January and also BoE (Bank of England) will be announcing its Interest Rate Decision in U.K. EUROPEAN MONETARY UNION will be coming out with its Industrial Production for the month of November and also ECB (European Central Bank) will be coming out with its Interest Rate Decision. Initial Jobless Claims, Continuing Jobless Claims, Business Inventories for the month of November, NIESR GDP Estimate (3M), Monthly Budget Statement and Retail Sales for the month of December will be announced in U.S. INDIA will be coming out with its IIP (Index of Industrial Production) Data for the month of November.

Q2 FY12 Results Season will be commencing from tomorrow. Some of the important results to be announced are of INFY, HDFC, DCB, and TTK PRESTIGE.

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 4765.06 on closing basis, but it is still trading below its 200-Days SMA (Simple Moving Average) and 50-Days SMA of 5247.65 and 4867.42, 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 57.11 and 50.19, respectively. The indicator is moving towards oversold zone from the overbought zone. 

2. MACD (26 Days & 12 Days): Their Values are 2.31 and 43.89, respectively. A short term negative crossover is indicated by both the Moving Averages.

3. +DI: 27.01, -DI: 23.88, ADX: 13.46: 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 5247.65, 4867.42 and 4765.06, respectively.

Some Trading Stats of the Wednesday’s (11^th January, 2012) Trading Session:

Net Buying of Rs. 431.31 Crore in Cash and of Rs. 496.34 Crore in F&O Segment by FIIs was witnessed on Wednesday’s Trading Session.

In F&O Segment Net Buying of Rs. 271.73 Crore, of Rs. 215.13 Crore and of Rs. 38.41 Crore was witnessed in Index Futures, Index Options and Stock Futures, respectively, whereas, Net Selling of Rs. 28.93 Crore was witnessed in Stock Options.

NIFTY JAN FUTURE ended at a Premium of 11.40 Points to the Spot NIFTY.

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

BPCL:               Can touch the levels of 518/522, if crosses the level of 508.

DRREDDY:        Can touch the levels of 1675/1685, if crosses the level of 1650.

HINDALCO:       Can touch the levels of 134/136, if crosses the level of 131.

JPASSOCIAT:    Can touch the levels of 58.80/59.50, if crosses the level of 57.

RELIANCE:        Can touch the levels of 765/770, if crosses the level of 750.

TCS:                 Can dip to the levels of 1115/1105, if breaches the level of 1135.

Pre Market Calls:

JISLJALEQS: Buy ONLY IF IT TRADES ABOVE 98 for the TARGETS of 103/105, with the STRICT SL of 96.70.

JETAIRWAYS: Buy ONLY IF IT TRADES ABOVE 204 for the TARGETS of 210/215, with the STRICT SL of 201.

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.