Nifty Outlook for 12 May 2010

Yesterday, on the daily charts, NIFTY made a Long Black Candlestick, shredding off almost 57.45 points from the previous day’s closing of 5203.30.  Monday’s move of 175.55 points was purely unjustifiable; and was driven by only the announcement made by European Union (EU), which announced a bailout package not only for Greece, but for whole of the European Region. Today China posted a gain of 2.8% in Inflation and 12.8% in the property prices; a stricter move is being expected by the Chinese Central Bank to avert the expected Property Price Bubble Burst in the country. Yesterday, too China reported a trade surplus of $1.68 billion in April, a drop of 87% from a year earlier. All this news flow may further weaken the market in the coming weeks.

Both the 20-Days EMA (Exponential Moving Average) and 50-Days SMA (Simple Moving Average) levels are now acting as resistance levels for NIFTY, which it yesterday failed to break. Today’s closing again below these levels will prove the presence of underlying weakness in the markets. RSI (Relative Strength Index) and MACD (Moving Average Directional Index), are giving SELL signal along with the rising volumes, hence traders are suggested to trade cautiously by following Strict Stop Losses and avoid making fresh investments at this point of time.

For the day, intraday resistance for NIFTY comes at 5150 / 5175 / 5200 levels. At the same time, 5115 / 5080 / 5045 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 44.82 and 43.98, respectively.
2. MACD (26 Days & 12 Days): Their Values are -29.28 and -6.48, respectively. a negative crossover is indicated by both the Moving Averages.
3. +DI: 19.64, -DI: 28.44, ADX: 25.23: The Negative Directional Index has gained strength over the Positive Directional Index and also the Average Directional Index is now above 20, indicating strength in the current trend.
4. SMA (50 Days) & EMA (20 Days): The values of these two indicators are 5207.06 and 5198.06. Both the Moving Averages are now acting as Strong Resistance levels for NIFTY. 

Stocks in Focus:

COLPAL        Can drag till the levels of 715, if breaches 734.

GLENMARK  Can drag till the levels of 265, if breaches 273.