"MARKET OUTLOOK & TRADING IDEA FOR MONDAY (24.10.2011)"

The 30-share benchmark index, Sensex dropped 297 points or 1.74% during the week to 16,785.64. Meanwhile, the broad based Nifty declined 82.35 points or 1.6% over the week to 5,049.95.  

FIIs were net sellers with the tune of ` 234.01 crore whereas DII were net buyers of ` 73.36 crore on Friday, the 21^st October 2011(prov. fig.)

VIEWS FROM DIFFERENT BROKING HOUSES:

HDFC SECURITIES: “With the markets correcting on Friday, it seems that the Nifty is not willing to break above the 5169 intermediate trend reversal levels for the time being. A continued failure to break above these levels could see the markets remaining range bound between the 4700-5169 levels. Immediate downside supports to watch are at 5000”.

KOTAK SECURITIES (DIPEN SHAH): “We believe that, the outcome of the meeting between European leaders, RBI policy meeting and F&O expiry will influence the market direction in the next week. We expect markets to remain volatile and would recommend bottoms up approach with a long term perspective”.

CANARA BANK SECURITIES (CanMoney): “Technically, after making a big bullish candle in last trading session, today Nifty closed on a very dull note and made significant loss. Nifty formed a big bearish candle and lost some of its vital supports, regained yesterday. Chart wise, it is a bearish engulfing pattern that signifies about surging strength of the bears in our market. Nifty has lost its sentimental support level of 5100. Owing to big ticket selling in large caps, small cap and mid cap, Bears outnumbers the bulls and because of this, Indices again closed with negative market breadth. In today’s session, Nifty not only closed weak, yet, maintained its closing above the vital supports of 9, 14 & 50 day’s SMA placed at 5072, 4990 & 4999 but closed below 100 day’s SMA placed at 5258. These levels may be the new ranges in forthcoming sessions. In today’s session, VIX, the barometer of uncertainty, rose and closed at a modestly low level of 25.60, indicating a more than average volatility in market in the forthcoming sessions. RSI (14) for the session was at 54.01 levels and MACD closed above the signal line, thus combined together they are giving the signals that; market may continue to witness some range bound movements in forthcoming session”.

BONANZA ONLINE: “After making long white candle stick previous week, Nifty made bearish candlestick on weekly charts, which shows that 5160-5200 zone is important resistance zone in Nifty. On downside, Nifty also has important support at 5000 levels. Until, decisive breakout above 5200 or breakdown 5000 levels seen, volatility may be continuing. Further, Nifty Oct future expiry along with RBI meet is due in this week and market further price movement will depend upon these events. For trading during the coming sessions, trend deciding level is 5050. If Nifty shows strength above 5050 levels then we may see rally 5100/5160//5200/5250 levels. If Nifty doesn’t sustain above 5050 levels then selling pressure till 5000/4950/4870/4800 may also be seen”.

Duration	Action	Entry Zone (NF)	For Target of	Stop Loss
For Monday	Buy	5050-5070	5130	5020
For the Week	Buy	5030-5080	5140-5180-5230	5000

BONANZA PORTFOLIO (Shanu Goel): “Market is expected to be volatile ahead of monetary policy review and Oct derivative series expiry in coming week. Below 5000, next support exists at 4940 and 4860.Global news flow too will have a significant impact on market trend”.

KARVY STOCK:  “The market will take cues from the global markets and is expected to open on a flat to positive note on the next trading day. Trade short, if the Nifty fails to cross 5,080 with a stop loss at 5,100 for targets of 5,030 and 5,000. Alternatively trade long, above 5,100 with a stop loss at 5,080 for targets of 5,150”.

ADITYA BIRLA MONEY (MONEY WEEKLY): “Indian Markets traded cautiously ahead of the EU summit over the weekend, a truncated expiry week ahead and RBI policy on Tuesday. Investors have been cautious and have traded mostly with a negative bias during the week. Corporate results as expected did not surprise, with couple of disappointments on the guidance front (L&T). Industrial commodities came under severe pressure with cuts of 5-8%. Steel has started to come off in the international markets but is yet to reflect in the domestic prices due to domestic issues and dollar appreciation. However, steel price cuts seem likely in the days ahead. Crude oil is not giving up as yet. Fall in industrial commodities generally benefits the Indian corporate sector; however, this could be negative for a specific commodity player. Markets seem to be clueless and are yet to figure out the outcome and timing of the impending Euro sovereign debt and banking crisis, thus creating a trading market. Out of the EU summit, investors would be looking for concrete and comprehensive steps on (1) Quantum of write-down of Greek Debt; (2) Bank recapitalisation from the losses suffered from sovereign debt write-downs; and (3) Ring fencing Spain and Italy from the contagion.”.

ICICI SECURITIES: “The Nifty is likely to trade with a bearish bias in the coming truncated week until it is able to sustain above 5130 levels. On the downside, the October series VWAP of 4992 and 50 DMA at 4998 should extend support. A breach of the range 4970-5130 may extend the directional movement. Bank Nifty has immediate resistance at 9850 and despite several attempts it failed to breach these levels. On the downsides, immediate support can be observed at 9450”.

SMC ONLINE (WISE MONEY): “The market is expected to remain in the range of the 5000-5200 levels in the short term. If the Index crosses the 5200 mark on a closing basis, it could shoot up sharply towards 5400 levels. Alternatively, a failure to surpass the 5200 mark would induce profit-taking, thereby dragging the Index down to lower supports of 5000 levels. Technically, the Index has climbed above the short- and medium-term averages, indicating bullishness to prevail in the near term. The put-call ratio of open-interest picked up during the week and closed higher at 1.60. The highest concentration of open-interest for the October series continued at the 4800-strike put, with open interest of 80 lakh shares. Among call options, the highest open interest of above 85 lakh shares is at the 5200 strike, indicative of a critical resistance”.

GABA & GABA FINANCIAL ADVISORS PVT LTD (Prakash Gaba): “Technically the market is not up unless 5050 gets taken out with force and we now head into a truncated week with holidays around the corner and I would not be surprised if the market slides down to the around 4944 zones From a trading point of view I would watch the 5100 and trade short. On daily chart, the market is weak and may slide down to around 4995 zones. The support for the Nifty is at 4995 and resistance at 5100-5174-5203”.

ANGEL BROKING (Technical): “Bulls are facing a major hurdle of this Weekly "Horizontal Line" and "20 EMA" near 17256/5198 levels. Therefore, we are of the opinion that unless we get some strong positive trigger on the global or domestic front, our markets may not cross this stiff resistance zone. On an optimistic note, a positive crossover in Weekly "RSI-smoothened" oscillator is still intact, which may come into action if indices manage to cross and sustain above 17256/5198 level. In this case, indices may rally towards the gap area of 17358-17665/5230-5323 created on August 5, 2011. On the other hand, indices have a decent support of Daily "20 EMA", which is now placed around 16714-16669/5025-5011 levels. Indices are likely to test 16460-16300/ 4944-4890 levels if indices manage to sustain below 16669/5011 level. Broadly speaking, indices have a trading range of 17256 to 16669/5198 to 5011. A violation of this range on either side would lead to a clear direction of the trend. Moreover, traders should take a note that the markets may react to various global and domestic events in the coming week. The decision of the European Union on the EFSF and monetary policy coupled with derivative expiry on Tuesday would lead to increased volatility in the markets. Therefore, we advise traders to stay light on positions and trade with strict stop losses”.

MICROSEC SECURITIES: “The daily chart of Nifty is showing that it has been moving in the range of 5010 and 5180 for last few days. We expect this range bound movement to continue for another few days. If it is able to maintain above 5180, an upward rally might carry it to 5230 and then 5320 in the short term. However, if Nifty breaks 5010, it may further go down to 4940 and then 4800. Traders are advised to maintain a stop loss at 5010 of the long positions. For the coming week, first support of Nifty lies at 5010 and the resistance is 5140. If Nifty breaks 5010, it may further go down to 4970 and then 4940. However, if Nifty is able to sustain above 5140, the level of 5180-5320 would become the next target”.

JRG EQUITY RESEARCH (IndiTrade): “The technical indicators are supporting the chances further downside. RSI is retracing from the 70-point overbought mark and so is Stochastic Oscillator. For NSE Nifty, the critical level for the week ahead will be 4990. If falls and remains below this, the downside can intensify further in the weeks ahead. The first support for the market is seen at 4940, followed by 4875. On upside, the first resistance for the week is expected at 5145 levels. Even if the market opens with some initial gains, the selling will possibly trigger from higher levels, with critical short-term resistance at 5170-5200 levels”.

INDIRA SECURITIES: “The markets closed in negative territory this week with all sectoral indices closing in the red. Capital goods remained the worst performer during the week and along with large-cap counters, mid-cap and small-cap stocks also came under selling pressure. This week, Nifty likely to trade in the range between 5200-5250 in the upper side and 4900–4850 in the lower side”.

SWASTIKA INVESTMART: “On weekly charts, we can observe that the index will face stiff resistance at 5170 levels. For the coming week, 5000 is the immediate support for the week. If the index slips below these levels then the selling pressure will cause Nifty to get support near 4960/4900 levels. On higher side it will face resistance at 5130 levels. Strength can be seen if it decisively maintains above these levels. Further gains are likely to face resistance towards 5170/5230 levels. Traders are advised to trade with strict stop-loss as some volatility may be witnessed due to F&O expiry for the October contract as well as RBI policy in this week”. 

UNICON WEEKLY: “Last week Nifty shut on a negative note @ 5050 and down by 82 points from the previous week's close. Technically Nifty on weekly chart has formed bearish candle stick pattern, which shows sideways sentiment in coming sessions. Nifty spot on weekly has opened at 5156.20 and made a high of 5160 and made a low of 5011 then finally closed sideways sentiment at 5050. Stochastics and the RSI are slightly oversold and sideways signalling that buying pressure at support levels are possible short-term. Nifty closed above the 50 day moving average (4997) indicates the short term trend could be turning sideways to bullish. Stochastics trending higher at midrange will tend to reinforce a move higher especially if support levels are taken out. The market setup is somewhat sideways to positive trend with trading range between 5000-5252. The next area of resistance is around at 5200-5252. So Nifty appears to be sideways trading on weekly chart having supports at 5040-4984 levels. For short term trading long positions, stop loss of 4950 is advisable. Weekly Nifty has resistance at 5200-5250 and supports at 5040-4984. Weekly Sensex has resistance at 17200-17510 and supports at 16740-16600. Weekly Bank Nifty has resistance at 9870-9950 and supports at 9580-9425”.

MAGNUM RESEARCH: “The market has been very lack lustre over the last few trading sessions. All the different voices on the euro summit this weekend have increased the volatility in global markets due to which Indian markets have performed on a cautious note. European officials announced that it may be a wait and watch on the resolution from the definite decision on the European financial stability fund (EFSF) may actually come through only on after discussions are held over the weekend. This may spark off another 3-4% rally in asset classes next week, but the key thing to look at is if this will spark off a durable rally or another temporary boost. We don’t think we will see a breakout of the 5000-5150 range, but we should definitely be able to cross it next week. So now all eyes are on the European officials and RBI monetary policy to determine the course for all asset classes. If the market is able to cross 5,200 levels, then it will be headed to 5,350 levels in a near term”.

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