Nifty Outlook for 14th February 2012

Yesterday, NIFTY made a High Wave Candlestick Pattern, which shows that there is a great amount of indecision in the market. The pattern implies a loss of sense of direction and that there is a great amount of indecision in the market. A confirmation to this candlestick pattern is definitely required in the form of an opposite move to the prior trade on the next trading day in order to judge that a reversal may be starting. A group of high wave candlesticks signal a possible reversal in the market. NIFTY opened flat and traded very range bound in the range of just 20 points (5380-5400). Gradually it started slipping in the negative zone in mid-noon and marked a low of 5351.40 for the day. However, the market gathered momentum after SBI posted healthy Q3results. A firm opening of the European markets also supported the market and pulled NIFTY back in green. It marked a high of 5421.05 for the day, crossing the levels of 5400. METAL and AUTO Sectors were the top Gainer of the day, pulling NIFTY higher, while CAPITAL GOODS Sector was the biggest loser for the day. Finally, NIFTY ended at 5390.20 for the day, again struggling a lot with the levels of 5400 on the closing basis.  

Technically, as mentioned earlier, “The 20-Days EMA is on the verge of crossing the 200-Days SMA, which will result in a Positive Moving average Crossover (The Shorter Term Moving Average crossing the Longer Term Moving Average from downside). This crossover may lead NIFTY to more heights in forthcoming trading sessions”. The 20-Days EMA has crossed the 200-Days SMA from downside, but NIFTY is facing a resistance of the level of 5400 on the closing basis. 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.

On the Economic Front, CHINA will be coming out with its FDI – Foreign Direct Investment for the month of December. BoJ (Bank of Japan) will be coming out with its Interest Rate Decision and Industrial Production for the month of January will be announced in JAPAN. U.K. will be coming out with its DCLG House Price Index for the month of December, RICS Housing Price Balance, Consumer Price Index, Retail Price Index and CB Leading Indicator Index for the month of January. Industrial Production for the month of December and ZEW Survey – Economic Sentiment for the month of February will be announced in EUROPEAN MONETARY UNION. GERMANY will be announcing its ZEW Survey – Economic Sentiment and ZEW Survey – Current Situation for the month of February. Business Inventories for the month of December, Import Price Index and Retail Sales for the month of January will be announced in U.S. INDIA will be coming out with its Monthly Inflation Numbers for the month of January.

Q3 FY12 Results Season has commenced in India. Some of the important results to be announced tomorrow are of ABGSHIP, AKZOINDIA, ALOKTEXT, AMTEKAUTO, BPL, COX & KINGS, DCHL, DHANBANK, DREDGINGCORP, EDUCOMP, ESSAROIL, GITANJALI, GTOFFSHORE, GVKPIL, HDIL, IVRCL LTD, JPASSOCIAT, MAX INDIA, NESTLE INDIA, REIAGRO, RELINFRA, SAREGAMA, SCI, STERLINBIO, TANLA SOLUTIONS, TATAMOTORS, UNITECH and VOLTAS. MAN SE and REPOWER SYSTEMS AG will be announcing their quarterly results in GERMANY. THE GOODYEAR TIRE & RUBBER CO and METLIFE INC will be coming out with their quarterly numbers 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 5205.10, 4935.27 and 5176.02, 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 71.99 and 72.03, respectively. The indicator is moving towards ovebought zone from the oversold zone. 

2. MACD (26 Days & 12 Days): Their Values are 195.15 and 185.58, respectively. A short term positive crossover is indicated by both the Moving Averages.

3. +DI: 33.05, -DI: 9.59, ADX: 36.07: 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 5205.10, 4935.27 and 5176.02, respectively on the closing basis.

Some Trading Stats of the Monday’s (13^th February, 2012) Trading Session:

Net Buying of Rs. 469.77 Crore in Cash while Net Selling of Rs. 393.96 Crore in F&O Segment by FIIs was witnessed on Monday’s Trading Session.

In F&O Segment Net Selling of Rs. 329.61 Crore, of Rs. 98.97 Crore and of Rs. 3.86 Crore was witnessed in Index Options, Stock Futures and Stock Options, respectively, whereas, Net Buying of Rs. 38.48 Crore was witnessed in Index Futures.  

NIFTY FEB FUTURE ended at a Premium of 27.80 Points to the Spot NIFTY.

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

RELINFRA:        Can touch the levels of 615/622, if crosses the level of 602.

SESAGOA:        Can touch the levels of 250/252, if crosses the level of 245.

For the day, intraday resistance for NIFTY comes at 5420 / 5450 / 5480 levels. At the same time, 5380 / 5350 / 5320 will act as major intraday support levels.