Nifty Outlook for 17th January 2012

Yesterday, NIFTY made a Small White Candlestick Pattern. NIFTY witnessed a negative opening of almost 20 points, backed by persistent selling pressure on renewed worries over Eurozone debt crisis. Before the announcement of Monthly Inflation Data for the month of December, NIFTY marked an intraday low of 4827.05, but did not breach the level of 4800. After trading range-bound in red till mid-noon session, news of ease in monthly inflation helped NIFTY to pare early losses. December inflation came in at 7.47% versus 9.11%, MoM. Thereafter, market gradually added gains and entered the positive terrain during late afternoon session and NIFTY registered an intraday high of 4880.80.But it could not sustain well above the level of 4880. CAPITAL GOODS and IT Sectors were the biggest gainers for the day, whereas, OIL & GAS Sector was the biggest loser. Finally, after a very volatile and roller coaster ride sort of trading session, NIFTY ended at 4873.90 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 Short Term Positive Moving Average Crossover is on the verge of development, as the 20-Days EMA (Short Term Moving Average) is on the verge of crossing the 50-Days SMA (Long Term Moving Average) from downside. This Crossover will result in a Short Term upside movement of NIFTY till the levels of 4950/5000. 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. Now, the level of 4957.07 (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, CHINA will be coming out with its Q4 Gross Domestic Product, Industrial Production and Retail Sales for the month of December. Machine Tool Orders for the month of December will be announced in JAPAN. U.K. will be announcing its DCLG House Price Index for the month of November, Consumer Price Index, Retail Price Index and CB Leading Indicator Index for the month of December. Consumer Price index for the month of December, ZEW Survey – Economic Sentiment for the month of January will be announced by EUROPEAN MONETARY UNION. GERMANY will be coming out with ZEW Survey – Economic Sentiment and ZEW Survey – Current Situation for the month of January. NY Empire State Manufacturing Index for the month of January will be announced in U.S.

Q2 FY12 Results Season has commenced in India. Some of the important results to be announced tomorrow are of HCLTECH, CHAMBLFERT and ZEENEWS. 

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) and 50-Days SMA (Simple Moving Average) of 4789.28 and 4843.20, respectively on the closing basis, but it is still trading below its 200-Days SMA of 5236.18. 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 57.57 and 53.28, respectively. The indicator is moving towards oversold zone from the overbought zone. 

2. MACD (26 Days & 12 Days): Their Values are 47.40 and 6.47, respectively. A short term negative crossover is indicated by both the Moving Averages.

3. +DI: 25.30, -DI: 23.74, ADX: 11.34: 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 5236.18, 4843.20 and 4789.28, respectively.  

Some Trading Stats of the Monday’s (16^th January, 2012) Trading Session:

Net Buying of Rs. 357.68 Crore in Cash while Net Selling of Rs. 186.11 Crore in F&O Segment by FIIs was witnessed on Monday’s Trading Session.

In F&O Segment Net Selling of Rs. 126.55 Crore, of Rs. 145.38 Crore and of Rs. 4.41 Crore was witnessed in Index Futures, Stock Futures and Stock Options, respectively, whereas, Net Buying of Rs. 90.23 Crore was witnessed in Index Options.

NIFTY JAN FUTURE ended at a Premium of 17.20 Points to the Spot NIFTY.

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

BHEL:               Can touch the levels of 284/286, if crosses the level of 278.

MARUTI:           Can touch the levels of 1030/1040, if crosses the level of 1010.

HINDUNILVR:     Can dip to the levels of 378/376, if breaches the level of 386.

RELIANCE:        Can dip to the levels of 695/690, if breaches the level of 710.

Pre Market Calls:

ABAN: Buy ONLY IF IT TRADES ABOVE 410 for the TARGETS of 418/422, with the STRICT SL of 404.

EDUCOMP: Buy ONLY IF IT TRADES ABOVE 225 for the TARGETS of 232/236, with the STRICT SL of 222.

For the day, intraday resistance for NIFTY comes at 4920 / 4950 / 4980 levels. At the same time, 4850 / 4820 / 4780 will act as major intraday support levels.