Nifty Outlook for 03rd February 2012

Yesterday, NIFTY made a Black Doji Candlestick Pattern with a very thin body and much longer lower shadow as compared to the upper shadow. A Doji represents the presence of uncertainties in the market and it also shows that still the market is confused about its direction. The formation of this Doji Candlestick Pattern may lead bears ahead of the bulls in next trading session. NIFTY registered a Gap Up Opening of almost 36 points backed by strong Global Cues. With the SC verdict against most telecom companies today, shares of telecos witnessed quite a blow. The Supreme Court (SC) cancelled 122 licenses issued after January 2008. TRAI will make fresh recommendations on grant of licenses. Also, all spectrum issues post Jan 2008 to be cancelled. The government will take decision on licenses 1 month post TRAI recommendation. After this Decision NIFTY took a dip to the levels of 5225.75 and marked an intraday low. It reverted form the same level and just before the opening of European Markets marked an intraday high of 5289.95, a good try to touch the levels of 5300. European Markets registered a lackluster opening and traded flat with negative bias, due to which NIFTY again dipped and traded flat, but did not breach the level of 5250 again while trading. IT, METAL, CAPITAL GOODS and REALTY & INFRA Sectors were the top gainers of the day, inching NIFTY higher, while PHARMA and CONSUMER DURABLES Sectors were the biggest loser for the day. Finally, NIFTY ended at 5269.90 for the day, registering a closing above the levels of 5250.  

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 5220.56 (50.00% Level of Retracement) is the next resistance level to be tested by NIFTY. 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. Consecutive two – three closing above the levels of 5220, will lead NIFTY to the levels of 5300/5440. 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, GERMANY will be coming out with its Purchasing Manger Index Services for the month of January. Retail Sales for the month of December and Purchasing Manager Index Services for the month of January will be announced by EUROPEAN MONETARY UNION. U.K. will be announcing its Purchasing Manager Index Services for the month of January. Factory Orders for the month of December, Nonfarm Payrolls, Average Hourly Earnings, Average Weekly Hours, Unemployment Rate and ISM Non-Manufacturing 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 CONCOR, DRREDDY, GODREJIND, HINDCOPPER, MADRASCEM, MPS, NIRMA, PIDILITIND, PFC, ROLTA, SREI INFRA, TAMIL NADU NEWS PRINT, TATA TELESERVICES and TRIDENT LTD. BT GROUP PLC will be coming out with their quarterly earnings U.K.

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 5035.55, 4862.61 and 5192.06, 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 71.34 and 68.46, respectively. The indicator is moving towards ovebought zone from the oversold zone. 

2. MACD (26 Days & 12 Days): Their Values are 186.20 and 140.27, respectively. A short term positive crossover is indicated by both the Moving Averages.

3. +DI: 38.37, -DI: 15.99, ADX: 24.84: 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 4862.61, 5035.55 and 5192.06, respectively on the closing basis.

Some Trading Stats of the Thursday’s (02^nd February, 2012) Trading Session:

Net Buying of Rs. 1941.23 Crore in Cash and of Rs. 1822.24 Crore in F&O Segment by FIIs was witnessed on Thursday’s Trading Session.

In F&O Segment Net Buying of Rs. 328.75 Crore, of Rs. 904.90 Crore and of Rs. 596.66 Crore was witnessed in Index Futures, Index Options and Stock Futures, respectively, whereas, Net Buying of Rs. 8.07 Crore was witnessed in Stock Options.  

NIFTY FEB FUTURE ended at a Premium of 4.45 Points to the Spot NIFTY.

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

BHARTIARTL:    Can touch the levels of 396/400, if crosses the level of 388.

DLF:                 Can touch the levels of 232/235, if crosses the level of 228.

GAIL:                Can touch the levels of 392/396, if crosses the level of 388.

HCLTECH:         Can touch the levels of 472/475, if crosses the level of 462.

HEROMOTOCO: Can touch the levels of 2000/2010, if crosses the level of 1980.

HINDALCO:       Can touch the levels of 162/165, if crosses the level of 159.

INFY:               Can touch the levels of 2795/2805, if crosses the level of 2765.

STER:               Can touch the levels of 128/130, if crosses the level of 125.

WIPRO:            Can touch the levels of 434/436, if crosses the level of 426.

DRREDDY:        Can dip to the levels of 1610/1600, if breaches the level of 1630.

IDFC:               Can dip to the levels of 128/126, if breaches the level of 131.

Pre Market Calls:

ANDHRABANK: Buy ONLY IF IT TRADES ABOVE 109 for the TARGETS of 112/115, with the STRICT SL of 107.50.

APIL: Buy AT THE LEVELS OF 371-372 for the TARGETS of 380/385, with the STRICT SL of 366. 

MCDOWELL-N: Buy ONLY IF IT TRADES ABOVE 720 for the TARGETS of 735/742, with the STRICT SL of 711. 

For the day, intraday resistance for NIFTY comes at 5280 / 5320 / 5350 levels. At the same time, 5250 / 5220 / 5180 will act as major intraday support levels.