Stock Market and Nifty View and Nifty Outlook for 12th December, 2011 (12/12/2011)

Nifty Outlook for December 12th, 2011

On Friday, NIFTY made a Black Doji Candlestick Pattern. Continuing its meltdown for the second day in a row, the market closed over 1.5% down-recovering from earlier losses- as the make-or-break EU summit failed to fully beat back the contagion concerns of debt crisis. In a highly volatile trade, market opened with huge losses. NIFTY witnessed a Gap Down Opening of almost 72 points.

NIFTY marked a low of 4841.75 for the day, breaching the support level of 4850, but maintained the level of 4820. Markets staged a smart recovery, wiping off major losses as buying emerged around support levels. Despite the turnaround in overall trend, the key NIFTY failed to enter the positive terrain. All the Sectoral indices, led by CAPITAL GOODS and AUTO, closed in the negative zone, with losses of up to 2.71% and 2.33% respectively.

ENGINEERING & INFRA Stocks were hammered, reflecting the edginess among investors over potential contraction in the index of industrial production (IIP) growth index for October. For the day, NIFTY marked a high of 4918.35, and closed above the crucial support level of 4850 at 4866.70.

Net Selling of Rs. 248.57 Crore in Cash and of Rs. 2476.16 Crore in F&O Segment by FIIs was witnessed on Friday’s Trading Session.

Technically, a Negative Crossover between 200-Days SMA (Simple Moving Average) and 50-Days SMA is still intact. Even a Negative Crossover between the 50-Days SMA and 20-Days EMA has developed since, which signals selling pressure to creep in coming trading sessions. NIFTY has again dipped below its 20-Days EMA and 50-Days SMA on the closing basis. A Fibonnaci Retracement Level is being drawn from the High of 6338.50 (08th November, 2010) to the 20-Months Low marked 4639.10 by NIFTY (24th November, 2011).

NIFTY has again reverted from the level of 61.80% (5039.54) of Retracement marked since last two trading sessions. The lower trendline marked from the low of 4720 marked on 26th August, 2011 is now acting as a Strong Support for NIFTY on closing basis, if it gets breach NIFTY may dip to the levels of 4750/4650 in the coming trading sessions. Still the markets all over the Globe are doubtful about the clarity of the European Debt Crisis.

A positive action is being eagerly awaited from PIIGS Countries all around the Globe. Hence, still the traders and investors should wait for fruitful results ahead. With deteriorating International Economic Scenario NIFTY even breached its important support level of 4720, which was acting as a Strong Support level since the month of August. The level of 4650 is acting as a good support level on the closing basis 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, JAPAN will be coming out with its Tertiary Industry Index for the month of October, Consumer Confidence Index and Machine Tool Orders for the month of November. Wholesale Price Index for the month of November will be announced in GERMANY. US will be announcing its Monthly Budget Statement for the month of November. INDIA will be coming out with IIP Data (Index of Industrial Production) for the month of October 2011.

Traders are suggested to trade cautiously by following Strict Stop Losses and Booking Fast Profits, whereas, Investors are suggested to stay from the markets right now, as market will give better chances ahead for Bottom Fishing and earning handsome returns thereafter.

NIFTY has again dipped below its 20-Days EMA (Exponential Moving Average) and 50-Days SMA (Simple Moving Average) of 4952.42 and 5016.72 and is still trading below its 200-Days SMA of 5335.48. The 14-Days RSI (Relative Strength Index) is heading towards its overbought zone now, but with every jerk it gets inclined towards the oversold zone. The 26-Days MACD (Moving Average Convergence and Divergence) has also reverted from its oversold zone.

For the day, intraday resistance for NIFTY comes at 4880 / 4920 / 4950 levels. At the same time, 4820 / 4780 / 4750 will act as major intraday support levels.

Contributed By: Sonal Natani MS(Finance), ICFAI, Hyderabad.
Equity Research Analyst, Indore