Nifty Outlook for 19th January 2012

Yesterday, NIFTY made a Short Black Candlestick Pattern, with a longer lower shadow. NIFTY kick-started traded on a negative note on the back of weak global cues, in addition with heavy selling in IT, technology and banking counters. NIFTY managed to cross the border to register intraday highs during early trade, but failed to hold on to the positive terrain for long. Since mind-noon session, the equities were seen gyrating between the two terrains till the closing bell. It rose as high as 4980.65 in the intraday trading and hit the bottom at 4931.05. The broader market, on the other hand, traded with heavy losses and ended near intraday lows. OIL & GAS and REALTY & INFRA Sectors were the biggest gainers for the day, whereas METAL, IT and CAPITAL GOODS Sectors were the biggest losers for the day. Finally, NIFTY ended at 4955.80 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 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. 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 4720 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. Continuous Two-Three Closing above this level, will lead NIFTY to the levels of 5050/5080 too. 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, EUROPEAN MONETARY UNION will be coming out with its Current Account for the month of November and ECB Monthly Report. Consumer Price Index, Housing Starts, Building Permits, for the month of December, Initial Jobless Claims, Continuing Jobless Claims, Philadelphia Fed Manufacturing Survey 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 BAJAJ-AUTO, BAJAJ HOLDINGS, BALAJITELE, DISHTV, HDFCBANK, HEROMOTOCO, IFCI and MASTEK. 

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 4806.23 and 4836.86, respectively on the closing basis, but it is still trading below its 200-Days SMA of 5232.34. 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 62.73 and 56.88, respectively. The indicator is moving towards oversold zone from the overbought zone. 

2. MACD (26 Days & 12 Days): Their Values are 77.01 and 22.23, respectively. A short term negative crossover is indicated by both the Moving Averages.

3. +DI: 30.40, -DI: 20.66, ADX: 12.35: 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 5228.18, 4830.19 and 4820.48, respectively.

Some Trading Stats of the Wednesday’s (18^th January, 2012) Trading Session:

Net Buying of Rs. 875.85 Crore in Cash and of Rs. 401.36 Crore in F&O Segment by FIIs was witnessed on Wednesday’s Trading Session.

In F&O Segment Net Buying of Rs. 677.70 Crore and of Rs. 100.46 Crore was witnessed in Index Options and Stock Options, respectively, whereas, Net Selling of Rs. 370.34 Crore and of Rs. 6.46 Crore was witnessed in Index Futures and Stock Futures, respectively.  

NIFTY JAN FUTURE ended at a Premium of 1.70 Points to the Spot NIFTY.

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

RELINFRA:        Can touch the levels of 460/465, if crosses the level of 447.

COALINDIA:      Can dip to the levels of 332/330, if breaches the level of 339.

Pre Market Calls:

DELTACORP: Buy ONLY IF IT TRADES ABOVE 73 for the TARGETS of 75/76, with the STRICT SL of 72.10.

SRTRANSFIN: Sell ONLY IF IT TRADES BELOW 530 for the TARGETS of 518/508, with the STRICT SL of 536.

For the day, intraday resistance for NIFTY comes at 4980 / 5020 / 5050 levels. At the same time, 4920 / 4880 / 4850 will act as major intraday support levels.