Nifty Outlook for 27th January 2012

Yesterday, NIFTY made a High Wave Candlestick Pattern. The pattern implies a loss of sense of direction and that there is a great amount of indecision in the market. The market opened flat with an upward bias, following positive cues from other Asian peers. Optimism scattered across the market after the RBI signaled it would support growth, thus, raising expectations for more foreign fund investments. However, trading was volatile during the day due to the F&O expiry of monthly contracts later in the day. A positive opening across European peers, combined with consistent buying in METAL, PSU stocks ensured progress above the previous day’s close during mid-session, and an upbeat closing. NIFTY marked an intraday high of 5174.15, but could not cross the resistance level of 5180. On the other hand, it marked a low of 5130.25. Finally, NIFTY ended at 5158.30 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 crossed the levels of 5080/5120 on the closing basis. “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”.  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). Now, the level of 5220.56 (50.00% Level of Retracement) is the next resistance level to be tested by NIFTY, the 200-Days SMA of 5208.32 also lies at the same point. The levels of 4957.07 (61.80% Level of Retracement) will now act as the immediate Support Level for NIFTY. 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 M3 Money Supply for the month of December. Q4 Gross Domestic Product and Real Personal Consumption Expenditures and also Reuters/Michigan Consumer Sentiment Index for the month of January will be announced in U.S.

Q3 FY12 Results Season has commenced in India. Some of the important results to be announced tomorrow are of BANKINDIA, BEL, BHEL, BLUE STAR, CANBANK, GUJARAT ALKALI, GSFC, NHPC, NTPC, PETRONET, PFIZER, SWARAJ ENGINES and WYETH.

Traders are suggested to trade cautiously by following Strict Stop Losses and Booking Fast Profits, whereas, Investors are suggested to take advantage of this short term move, which may pay off excellent returns.

NIFTY has crossed its 20-Days EMA (Exponential Moving Average) and 50-Days SMA (Simple Moving Average) of 4825.42 and 4925.42, respectively on the closing basis, but it is still trading below its 200-Days SMA of 5208.32. 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 73.83 and 66.13, respectively. The indicator is moving towards oversold zone from the overbought zone. 

2. MACD (26 Days & 12 Days): Their Values are 132.25 and 83.20, respectively. A short term negative crossover is indicated by both the Moving Averages.

3. +DI: 39.32, -DI: 15.34, ADX: 19.30: 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 (Exponential Moving Average) and 50-Days SMA (Simple Moving Average) of 4825.42 and 4925.42, respectively on the closing basis, but it is still trading below its 200-Days SMA of 5208.32.

Some Trading Stats of the Wednesday’s (25^th January, 2012) Trading Session:

Net Buying of Rs. 1147.01 Crore in Cash and of Rs. 1013.47 Crore in F&O Segment by FIIs was witnessed on Wednesday’s Trading Session.

In F&O Segment Net Buying of Rs. 866.56 Crore and of Rs. 196.45 Crore was witnessed in Index Options and Stock Futures, respectively, whereas, Net Selling of Rs. 14.64 Crore and of Rs. 34.90 Crore was witnessed in Index Futures and Stock Options, respectively.  

NIFTY JAN FUTURE ended at a Premium of 3.10 Points to the Spot NIFTY.

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

COALINDIA:      Can touch the levels of 347/350, if crosses the level of 343.

SAIL:                Can touch the levels of 101/103, if crosses the level of 99.

SESAGOA:        Can touch the levels of 206/208, if crosses the level of 202.

CAIRN:             Can touch the levels of 338/335, if crosses the level of 345.

Pre Market Calls:

AUROPHARMA: Buy ONLY IF IT TRADES ABOVE 111 for the TARGETS of 116/118, with the STRICT SL of 109. 

RAYMOND: Buy ONLY IF IT TRADES ABOVE 336 for the TARGETS of 342/345, with the STRICT SL of 332.

For the day, intraday resistance for NIFTY comes at 5180 / 5220 / 5250 levels. At the same time, 5120 / 5080 / 5050 will act as major intraday support levels.