Wkly Tech: Crucial trading sessions ahead

The markets ended the penultimate week of the year on a weaker note. The Sensex remained in the red throughout the holiday-shortened week as derivates expiry and the India-Pakistan tension weighed on the market sentiment.
The Sensex, which was in the overbought zone, saw a more-than-expected downside with the benchmark sliding 7.6 per cent (771 points) to 9,329. Among the index stocks — Jaiprakash Associates, Mahindra & Mahindra, Satyam, Tata Motors, Reliance Infrastructure, ICICI Bank, Sterlite, Hindalco, Reliance, DLF and Bhel — dropped 10-17 per cent each.
Geo-political factors followed by the quarterly numbers are likely to dominate the market sentiment for a while. Around this time last year, the index was holding the 20,000-mark. So steep has been the fall that the index is most likely to end the year with a loss in excess of 50 per cent.
Further downside could see the index take support around the 9,000-9,100 levels, while on the upside, the index is likely to face resistance around 9,670.
The NSE Nifty touched a high of 3,110, then slipped to a low of 2,845 — down 266 points from the week’s high. The Nifty finally ended the week with a loss of 220 points at 2,857.
The Nifty is precariously poised just below its short-term (20 days) and mid-term (50 days) daily moving average (DMA). While the short-term DMA is 2,873, the mid-term DMA is 2,908. With both lines converging and the index at around the same levels, it indicates some crucial trading sessions in the coming days.
As and when the short-term DMA crosses the mid-term DMA, the trend will change to positive. However, for this to happen, the index needs to sustain above the 2,800-mark for the next three-four trading sessions.
As per the fibonacci analysis, the Nifty is likely to find support around 2,755 in the short term and will face resistance around the 2,900-2,960 levels. A sustained break of 2,750 could accelerate the fall in the index.

Nifty resistance at 2960 / 3040 and support at 2670

Nifty moved close to our first short-term target at 2958 and closed with a 207-point gain last week. The short-term trend in the index is positive since the trough at 2502. This up-trend can extend to 3112 or 3490. The medium trend in the index is, however, sideways and a move between 2500 and 3500 is likely in this period. The medium-term view will turn positive only on a weekly close above 3500.
Nifty will face resistance from 2960 and 3040 in the week ahead. A downward reversal from the resistance zone between 2950 and 3050 will pull the index lower to 2670 or 2500 once more.

nifty may spurt upto 2958

Nifty too trudged sideways between 2550 and 2850 last week. A spurt in the early part of next week will take the index up to 2958 or to the 50-day moving average at 3150. A reversal below the first resistance would provide the opportunity to initiate fresh shorts in the index.
However, if the Nifty declines below 2500, it would imply that the down move from the 3240 peak has resumed and the downward targets in this case are at 2365 and 2083. The preferred view is that the index moves sideways between 2500 and 3500 over the medium-term.

If BJP wins assembly elections, it may trigger upmove

If the NDA/BJP is able to maintain its grip over Chattisgarh, Madhya pradesh and Rajasthan and at the same time capture Delhi from the INC,we might see a rally in the Indian indices. There is a Golden rule which says that market doesn’t like uncertainty and the same rule mentions that the market rewards certainty. Watch for the days when the results will be out. If there is a consensus on either side one will make money by selling the News and vice versa. Technically the short termview is positive. The resistance in Nifty is at 20dma at 2837.Above 20dma the next resistance is at 50dma at 3211. These levels are in a broader sense. Macd has given a positive divergence in the chart. Rsi at 43 is also not in a SELL zone. One should tread cautiously on either side in the markets.
The Fii’s Figures for Friday was on a Buy side of 168 crs. Traders should remember that one shouldn’t read much from the figures on a settlement day. There will be selling based on Hedge fund redemption in December. Again this is a consensus now and markets seldom moves on the same.

Nifty support at 2628 below 2860

Nifty reversed from the peak at 3240 on Wednesday and closed the week with an 87 points gain. Our medium-term resistance level was tested very fleetingly and it remains the key level to watch out for. However, the fact that the index is holding above the 2860 in the recent pull-back is a positive for the short-term and if this level holds, Nifty can rally once more to 3240 or even 3471. Support below 2860 would be at 2628. The near-term view will turn overtly negative only on a penetration of this level.
Though the short-term view is positive, the medium-term view is neutral. The zone between 3175 and 3250 will try to thwart any up-move. However, if this level is surpassed, there can be a surge to 3470 or 3740.

Nifty may find support at 2860/2800/2750 and face resistance at 3100/3250

Following weak global cues, Indian markets traded flat with downward bias. Nifty went to a low of 2,860 but bounced from there. During the post noon session, positive Asian cues resulted in a rally developing in Indian markets. Nifty went to high of 3,010 and closed at 2,973. Good buying was seen in beaten down Metals, Oil & Gas and Power sectors. Suzlon, Nalco, Power Grid, Reliance Infra were among heavyweight gainers. Selling was seen in Tata Comm, Siemens, ABB, M&M.``
Nifty has support at 2,940/2,860,( on breaking 2860 2800/2750 ), on upside resistance can be at 3,000/3,050/3150/3250 levels. Traders are advised strict stop-losses. Investors can use the opportunity to create folio for long term.``

Nifty - volatile swings ahead

Nifty declined below the 3800 level on Monday and recorded a trough at 3198.9 on Friday, way below our outermost medium-term target. Though we were anticipating a decline, the swiftness definitely took us by surprise. The supports on the long-term charts for the Nifty are now at 2940 (61.8 per cent retracement of the up-move from 2001) and then at 2595 (June 2006 trough). The medium term outlook will turn positive only on a weekly close above 3800.
Near term resistances would be at 3530 and 3610. Reversal below these levels will indicate further weakness. Subsequent resistance is at 3879.

nifty weekly outlook

Nifty recorded an intra-week low at 3715 on Tuesday. But there was a sharp rebound from here and the index closed the week within our medium-term range between 3800 and 4500.
Technical indicators, however, signal that this support could be breached in the short-term and the index could decline to 3715 or 3636 in the week ahead. Failure to move above 4070 in the early part of the week will fortify this assumption.
The medium-term view too is currently negative and the target of the move from 4649 gives us the downward targets at 3778 and then 3454. If the down move continues next week, the second target would be in reckoning.

Nifty - target beyond 4350 is 4558

It was an action packed week for the Nifty as well. It declined to an intra-week trough at 3799 before rallying smartly to close with 16 points weekly gain. For the medium-term, the index can move higher to 4330, 4658 or 4986. The previous peak at 4649 and the 200-day moving average at 4908 will be other medium-term resistance levels.
The long-term trend continues to be down and this view will be mitigated on a strong close above 4900.
For the short-term, Nifty would face resistance from the zone between 4300 and 4350. A reversal from here will drag the index towards 3800 again. Interim supports are at 4090 and 3980. Target beyond 4350 is 4558.

Strong volumes show positive run ahead

The coming session is likely to witness the range of 4385 on advances and 4100 on declines. The bullish pivot for the coming session will be at the 4180 mark. The wide range is due to the high base effect of the range on Friday. Follow-up buying is a pre-requisite for a sustained upmove here onwards. Watch the turnover figures keenly.
The outlook for the markets on Monday remains that of optimism, barring unforeseen circumstances.

nifty 2 day swing

Buy on intraday declines. Target 4400 / 4500.

‘Waiver will trigger short-term market euphoria’

The Nuclear Supplier Group waiver granted to India in Vienna on Saturday, after many a hiccup over the last couple of days, will definitely act as a “mood enhancer” for the Indian bourses when they open on Monday. But the key question is how long this “feel good” effect will last, point out market players.
In the short term of course, the equity market is expected to do a jig and celebrate the end of India’s long-drawn isolation in getting modern technology and material required for its civil nuclear programme. The capital goods and power sectors stand to benefit from this development. But in the long run, factors that are spoiling the party for equity investors, such as rising oil prices, increasing inflation and a tardy US economy, will need to reverse to really have a sustainable positive impact on our market, seems to be the consensus.
Mr C.J. George, Managing Director of Geojit Financial Services, says that in the immediate future, the market “will take the waiver as a positive sign. Actually, for me, this is much more positive news than the passing of the trust vote in Parliament. This will enable India to really move forward in the critical area of energy; so it is clearly a positive for the economy. But the ultimate movers of the market will be dips in inflation and interest rates and a much better global environment. But in the short term, there will be a sense of euphoria in the market.”
Mr T.P. Raman, Managing Director of Sundaram BNP Paribas Asset Management, cannot see this development as a very big mover of the market. “I see it as having a much more positive impact on India’s political future rather than the equity market. By itself, the NSG waiver cannot transform into financial implications for the markets and move them forward.”
In the long term, he feels, the markets will continue to remain volatile; “increasing inflation, rising interest rates and oil prices need to stabilise before we see any real positive impact on the market. But this is definitely a feel good factor in the short term for the market.”
Mr Sandeep Shenoy, Strategist at PINC Research, Mumbai, agrees that the NSG waiver will push up the indices for the short term. “At least this sets aside the overhang of the last few days that the Prime Minister might have to resign and political uncertainty will follow. So in that way it is a positive.”
But realistically speaking, he adds, “for any concrete benefits to come to the capital goods and the power sectors will take a minimum of 18 months. But then, as usual, the market will try to jump the gun and celebrate.”Guide for investors
His advice to investors: Be careful, do not try to trade as you can get trapped into buying at higher prices. Ride out the euphoria and wait for the second quarter results. “These are not going to be so good; maybe even the worst in recent times. I think Q2 results will have a bottoming out effect on the markets, which means the poison will get out of the system. After this it will take a while for the upswing to begin. So investors should move in a calculated manner and not be influenced by 2-3 days of gung-ho sentiment,” adds Mr Shenoy.

Short-covering may trigger buying

The bulls will need to keep the Nifty spot above 4320. On the flip side, a consistent trade below the 4300 level will be a negative indicator. The coming session is likely to witness a range of 4380 on advances and 4245 on declines.

Bulls lack buying conviction

The markets opened on a strong note and ended off their intraday highs as the higher levels could not be sustained due to lack of buying support. The traded volumes were poor and the market breadth was marginally positive as the combined exchange figures were 1952:1889. The capitalisation was similarly positive as the commensurate figures were Rs 5,497 crore:Rs 5,136 crore.
The indices have closed at the lower end of the intraday spectrum as follow-up buying and traded volumes were abysmal. The intraday range specified for Monday at the 4400 / 4270 level held as the Nifty retraced from the 4399 mark itself, validating our wave count. The weak market internals indicate a desperate need for follow-up buying, without which a sustainable upmove may be elusive.
The oriental charts indicate caution as the closing has been near the open and the inverted "doji" formation has a "long shadow". The bulls will need to take the markets past the Monday intraday highs to rope in the retail buyers. The coming session is likely to witness a range of 4385 on advances and 4265 on declines. As long as the Nifty spot remains below the 4350 pivot, the bears will rule the roost.
The outlook for the markets on Tuesday is that of abundant caution as the bulls are clearly lacking buying conviction. Unless heavy duty buying support kicks in, expect short-term weakness.

Global Cues - Turbulent times ahead

The crude, dollar and gold troika dominated the financial markets last week as analysts went nuts trying to explain how these affected each other and the equity markets.
With the dollar pausing its meteoric rise, crude moved between $111 and $120. Friday’s sell-off that came after a 30 per cent retracement of the decline from the recent peak at $147, implies that the support at $110 would be under severe pressure in the near term.
Dow Jones Industrial Average reversed higher from an intra-week trough at 11290, above the key short-term support at 11230 that we have been watching over the last couple of weeks. The S & P 500 is also putting up a resilient show. The key support for this index is at 1240. Though European and Latin-American markets stabilised last week, Asia remained turbulent. Many of the Asian indices such as Hang Seng, Shanghai Composite, Seoul Composite and Straits Times Index recorded new 2008-lows last week.

Index Outlook - global cues will decide

Nifty continued its losing streak by declining 103 points last week. The index is currently pausing just above its 50-day moving average at 4280. A move higher to 4443 or 4522 is possible next week. Reversal from either of these levels would provide shorting opportunity to short-term traders. Move beyond the second target is needed to make the near-term outlook positive.
However, the medium-term view for the index remains positive as long as it holds above 4115. Reversal from 4220 or 4120 would imply that that the index can rally to the zone around 5000 over the medium-term.

Upmove would hinge on global cues

The coming session is likely to witness a range of 4400 on advances and 4270 on declines. If the 4272 level is violated, expect a decline upto the 4190 levels. For the bulls to remain in charge, the Nifty spot must trade above the 4300 level consistently.
The outlook for the session on Monday is that of guarded optimism. Should the overseas cues be positive, expect a small upmove.

Nifty may open on a negative note and recover

On Friday, Nifty may open on a negative note. On Thursday, Nifty showed selling pressure and closed in red with bearish market breadth. Nifty closed below its support at 4,325. For the daily purpose trend deciding level is 4,275. If Nifty shows strength above 4,275 with good volumes then we may see a rally upto 4,295/4,325/4,345.`` Upside crossover may take it to 4,375/4,395/4,425 and higher. On the other hand, if Nifty doesn`t sustain above 4,275, then we may see a decline to 4,245/4,225/4,195. Breakdown may take it to 4,175/4,145/4,125, he said. For the swing traders if Nifty doesn`t sustain above 4,275 then we may see a decline to 4245/4190. If Nifty manages to sustain above 4,275 then we may see a rally to 4,325/4,375.