Nifty Outlook for 23rd January 2012

On Friday, NIFTY made a Bearish Hanging Man Candlestick Pattern. It signals a market top or a resistance level. Since it is seen after an advance, a Bearish Hanging Man Pattern signals that selling pressure is starting to increase. The low of the long lower shadow indicates that the sellers pushed prices lower during the session. Even though the bulls regained their footing and drove prices higher by the finish, the appearance of this selling pressure after a rally is a serious warning signal. Confirmation of this formation may be in the form of a black candlestick, a large gap down or a lower close on the next trading day. NIFTY started off the day on a positive note on back of strong global cues. Later the market gathered momentum and traded range-bound till late afternoon. However, a sudden bout of selling pressure in the FMCG space dragged NIFTY to the intraday low, in red. It marked a low of 5004.30 for the day. Nevertheless, on the back of good third quarter earnings by Axis Bank, the banking space gathered momentum, which bolstered the market to intraday highs in the positive terrain, only thirty minutes before the closing bell. NIFTY registered an intraday high of 5065.15; it reverted sharply from the day’s low level. It maintained the support level of 5000 very well. BANKING & FINANCE, CONSUMER DURABLES, POWER and OIL & GAS Sectors were the biggest gainers for the day, whereas, FMCG Sector was the biggest dud for the day. Finally, NIFTY ended at 5048.60 for the day.

Technically, a Negative Crossover between 200-Days SMA (Simple Moving Average) and 50-Days SMA is still intact. As mentioned earlier, NIFTY has touched the levels of 4950/5000 on the closing basis. “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, NIFTY has also crossed the level of 4957.07 (61.80% Level of Retracement) on the closing basis, which may lead it to the levels of 5080/5120, if it registers continuous two-three Closing above this. 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 Consumer Confidence for the month of December.

Quarterly Results Season has commenced all over the Globe. INDIA Inc. will be Q3 FY12 Results. Some of the important results to be announced tomorrow in INDIA are of COLPAL, COROMANDEL INTL, ELECTROSTEEL CAST, FEDERALBNK, GAIL, GEOMETRIC, IDEA, KOTAKBANK, KPIT, LT, LAKSHMI MACHINE, MARUTI, SHREECEMENT, STER, TORRENT PHARMA and VARDHMAN TEX.

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 4859.26 and 4823.73, respectively on the closing basis, but it is still trading below its 200-Days SMA of 5220.21. 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 68.28 and 60.71, respectively. The indicator is moving towards oversold zone from the overbought zone. 

2. MACD (26 Days & 12 Days): Their Values are 98.56 and 48.17, respectively. A short term negative crossover is indicated by both the Moving Averages.

3. +DI: 33.38, -DI: 18.31, ADX: 14.50: 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 5220.21, 4823.73 and 4859.26, respectively. 

Some Trading Stats of the Friday’s (20^th January, 2012) Trading Session:

Net Buying of Rs. 819.84 Crore in Cash and of Rs. 1743.20 Crore in F&O Segment by FIIs was witnessed on Friday’s Trading Session.

In F&O Segment Net Buying of Rs. 538.79 Crore, of Rs. 842.65 Crore and of Rs. 380.15 Crore was witnessed in Index Futures, Index Options and Stock Futures, respectively, whereas, Net Selling of Rs. 18.39 Crore was witnessed in Stock Options.  

NIFTY JAN FUTURE ended at a Discount of 0.75 Points to the Spot NIFTY.

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

AXISBANK:        Can touch the levels of 1045/1055, if crosses the level of 1020.

BAJAJ-AUTO:   Can touch the levels of 1590/1600, if crosses the level of 1565.

PNB:                Can touch the levels of 970/975, if crosses the level of 952.

M&M:               Can dip to the levels of 642/638, if breaches the level of 656.

Pre Market Calls:

BANKINDIA: Buy ONLY IF IT TRADES ABOVE 320 for the TARGETS of 328/332, with the STRICT SL of 316. 

TITAN: Buy ONLY IF IT TRADES ABOVE 192 for the TARGETS of 196/198, with the STRICT SL of 189.

For the day, intraday resistance for NIFTY comes at 5080 / 5120 / 5150 levels. At the same time, 5020 / 4980 / 4950 will act as major intraday support levels.