Nifty Outlook for 31st January 2012

Yesterday, NIFTY made a Long Black Candlestick Pattern with a Gap Down. The candle formation confirmed the day before yesterday’s formation of Bearish Dragonfly Doji Candlestick Pattern. The markets broke a six-day winning streak, with investors scrambling to book profits. NIFTY witnessed a Gap Down Opening of almost 40 points on back of weak Asian trend, in addition with a round of profit-booking in CAPITAL GOODS, POWER and BANKING & FINANCE Stocks. NIFTY tried to rise above the level of 5200, but it could not even make up to touch or cross the level of 5180 and hence marked an intraday high of 5166.15. Since then the market started losing and NIFTY dipped almost 89.45 points from the high point of the day which totaled to 130 points loss for the day (including the Gap Down). It marked a low of 5076.70 for the day and breached the support of 5080 in trading. Again, the fears and doubt on Greek Economy led the downtrend in the markets all over the Globe. CAPITAL GOODS Sector was the biggest dud for the day. Other than that, POWER, REALTY & INFRA, METAL, BANKING & FINANCE, CONSUMER DURABLE, OIL & GAS, PSU, AUTO and IT Sectors were the losers for the day. Finally, NIFTY ended at 5087.30 for the day, sustaining above the levels of 5080.

Technically, a Negative Crossover between 200-Days SMA (Simple Moving Average) and 50-Days SMA is still intact. For the day, NIFTY however marked a high of 5217.00, and crossed the 200-Days SMA of 5204.92 too, but it closed below it at 5204.70. The level of 200-Days SMA also acts as a very good resistance for NIFTY on the closing basis right now. 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 5201.15 also lies almost at the same point. The levels of 4957.07 (61.80% Level of Retracement) will now act as the immediate Support Level for NIFTY. NIFTY has now crossed all the resistance levels and also closed above the level of 5200. It may witness a pause at the level of 5220 to move ahead for the levels of 5300/5440 or may also revert from this level to 5050/4950. 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 announcing its Housing Starts for the month of December. Consumer Credit, M4 Money Supply, Mortgage Approvals and Net Lending to Individuals for the month of December and Gfk Consumer Confidence for the month of January will be announced in U.K. GERMANY will be announcing its Retail Sales for the month of December and Unemployment Rate for the month of January. Unemployment Rate for the month of December will be announced by EUROPEAN MONETARY UNION. U.S. will be announcing its S&P / Case-Shiller Home Prices Indices for the month of November, Chicago Purchasing Managers’ Index and Consumer Confidence for the month of January.

Q3 FY12 Results Season has commenced in India. Some of the important results to be announced tomorrow are of ABAN, AGCNET, BASF INDIA, BIRLA CORP, BLUE DART, CENTRAL BANK, CENTURY ENKA, CENTURY TEX, CROMPGREAV DABUR INDIA, DELTA CORP, FDC, FINANTECH, GATEWAY DISTRIPARKS, HCL INFOSYSTEMS, HINDUSTN MOTORS, ICICIBANK, IDBI, IPCA LAB, KEC INTL, NMDC, PNB, PTC INDIA, SIEMENS, SILVERLINE TECH, TITAN and TVSMOTOR. VENDANTA RESOURCES PLC and XSTRATA PLC will be coming out with their quarterly results in U.K. MCGRAW – HILL COMPANIES INC, ELI LILLY AND CO, PFIZER INC, AMAZON.COM INC and BERKSHIRE HILLS BANCORP INC will be announcing their quarterly results in U.S.

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 4834.45 and 4694.90, respectively on the closing basis, but it is still trading below its 200-Days SMA of 5201.15. 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 62.46 and 66.96, respectively. The indicator is moving towards oversold zone from the overbought zone. 

2. MACD (26 Days & 12 Days): Their Values are 148.25 and 105.89, respectively. A short term negative crossover is indicated by both the Moving Averages.

3. +DI: 36.34, -DI: 20.72, ADX: 21.78: 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 4834.45 and 4694.90, respectively on the closing basis, but it is still trading below its 200-Days SMA of 5201.15.

Some Trading Stats of the Monday’s (30^th January, 2012) Trading Session:

Net Selling of Rs. 201.71 Crore in Cash and of Rs. 422.81 Crore in F&O Segment by FIIs was witnessed on Monday’s Trading Session.

In F&O Segment Net Selling of Rs. 1154.94 Crore, of Rs. 159.74 Crore and of Rs. 4.20 Crore was witnessed in Index Futures, Stock Futures and Stock Options, respectively, whereas, Net Buying of Rs. 896.07 Crore was witnessed in Index Options.  

NIFTY FEB FUTURE ended at a Premium of 24.80 Points to the Spot NIFTY.

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

AXISBANK:        Can dip to the levels of 1000/990, if breaches the level of 1120.

BHEL:              Can dip to the levels of 238/236, if breaches the level of 243.

BPCL:               Can dip to the levels of 551/546, if breaches the level of 563.

HINDUNILVR:     Can dip to the levels of 374/372, if breaches the level of 382.

ICICIBANK:        Can dip to the levels of 822/812, if breaches the level of 845.

JPASSOCIAT:    Can dip to the levels of 64.60/63.50, if breaches the level of 65.60.

PNB:                Can dip to the levels of 935/928, if breaches the level of 952.

RCOM:              Can dip to the levels of 89.50/88, if breaches the level of 91.50.

TATAPOWER:    Can dip to the levels of 101/99, if breaches the level of 103.

For the day, intraday resistance for NIFTY comes at 5120 / 5150 / 5180 levels. At the same time, 5050 / 5020 / 4980 will act as major intraday support levels.