Nifty Outlook for 08th February 2012

Yesterday, NIFTY made a Black Opening Marubozu Candlestick Pattern, signaling that it was a day for bears and such a bearish rally should cause concern among the bulls. The candlestick formation confirmed of Bearish Hanging Man Candlestick Pattern formed the previous day. NIFTY marked a Gap Up Opening of almost 51 points and crossed the levels of 5400 too. But immediately after opening it came down and settled to the levels of 5380. Just before the announcement of GDP Estimation by the Government NIFTY again ran to mark an intraday high of 5413.35, but could not even touch or cross the level of 5420. India’s gross domestic product (GDP) is estimated to grow an annual 6.9 percent in the 2011/12 fiscal year. The estimated figures of 6.9 percent growth in 2011-12 is a three-year low, mainly due to a sharp slowdown in manufacturing, agriculture and mining sectors. After this announcement NIFTY traded in the range of 20 points (5400-5380), waiting for the European Markets to open and get a further clue to move. European markets registered a Cold Blooded Opening with a Negative Bias. Hence, NIFTY also lost its sheen and slipped to the day’s low of 5322.95 (almost 90 points down from the day’s high level), maintaining well above the levels of 5320. CAPITAL GOODS Sectors was the top loser of the day, pulling NIFTY lower, while OIL & GAS Sector was the biggest gainer for the day. Finally, NIFTY ended at 5335.15 for the day.

Technically, a Negative Crossover between 200-Days SMA (Simple Moving Average) and 50-Days SMA is still intact. Yesterday, NIFTY crossed this level on the closing basis too. 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 5433.52 (31.80% Level of Retracement) is the next resistance level to be tested by NIFTY. The levels of 5220.56 (50.00% 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. As mentioned earlier, NIFTY 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. NIFTY crossed the level of 5220 with excellent spurt and even touched the level of 5334.85. 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 coming out with its Core Machinery Orders for the month of December, Money Supply M2+CD, Eco Watchers Survey: Current and Eco Watchers Survey: Outlook for the month of January. BRC Shop Price Index for the month of January will be announced in U.K. GERMANY will be coming out with its Trade Balance and Current Account for the month of December. MBA Mortgage Applications will be coming out in U.S.

Q3 FY12 Results Season has commenced all over the Globe. Some of the important results to be announced tomorrow in INDIA are of BHARATFORG, BHARTIARTL, JSWISPAT, JUBLFOOD, KALPATARU POWER, ONGC, ORCHIDCHEM, POWERGRID, SHYAM TELECOM and TECHMAHINDRA. SANOFI SA will be coming out with its quarterly earnings in FRANCE. THOMAS COOK GROUP PLC and RECKITT BENICKISER GROUP PLC will be announcing their quarterly numbers in U.K. MOODYS CORP, SPRINT NEXTEL CORP, TIME WARNER INC, VISA INC and CISCO SYSTEMS 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), 50-Days SMA (Simple Moving Average) and also 200-Days SMA of 5114.82, 4896.70 and 5185.57, respectively on the closing basis. 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 72.01 and 70.88, respectively. The indicator is moving towards ovebought zone from the oversold zone. 

2. MACD (26 Days & 12 Days): Their Values are 194.94 and 166.38, respectively. A short term positive crossover is indicated by both the Moving Averages.

3. +DI: 41.02, -DI: 12.84, ADX: 29.77: The Positive Directional Index has gained strength over the Negative Directional Index and the Average Directional Index is above 20, indicates that the trend of the market is strengthening. 

4. SMA (200 Days), SMA (50 Days) & EMA (20 Days): NIFTY has crossed its 20-Days EMA (Exponential Moving Average), 50-Days SMA (Simple Moving Average) and also 200-Days SMA of 4896.70, 5114.82 and 5185.57, respectively on the closing basis.

Some Trading Stats of the Tuesday’s (07^th February, 2012) Trading Session:

Net Buying of Rs. 618.84 Crore in Cash and of Rs. 514.05 Crore in F&O Segment by FIIs was witnessed on Tuesday’s Trading Session.

In F&O Segment Net Buying of Rs. 692.95 Crore and of Rs. 6.01 Crore was witnessed in Index Futures and Stock Options, respectively, whereas, Net Selling of Rs. 77.28 Crore and of Rs. 107.63 Crore was witnessed in Index Options and Stock Futures, respectively.  

NIFTY FEB FUTURE ended at a Premium of 20.05 Points to the Spot NIFTY.

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

TATASTEEL:     Can dip to the levels of 440/438, if breaches the level of 450.

For the day, intraday resistance for NIFTY comes at 5350 / 5380 / 5420 levels. At the same time, 5320 / 5280 / 5250 will act as major intraday support levels.