Nifty Outlook for 24th May 2010

On Friday, on the daily charts, NIFTY made a Bullish Hammer Pattern, the reliability of which increases if the next day’s high is above the high of the hammer build up. Due to negative global cues NIFTY made a gap down opening of almost 70 to 80 points and made a low of 4842.30, but at the same time short covering was observed in the markets, which helped the markets to recover. In the second half, markets recovered as the SHANGHAI Index turned positive at the time of its closing. During the whole session, NIFTY recovered almost from the day’s low and closed at 4931.15, after making a high of 4946.70.

On the Weekly Charts too, NIFTY is signaling a cautious approach towards the markets in coming days, as it is taking strong support at 40-Days EMA of 4919.87, which if breaches decisively will call for a Major Correction.

Both the 20-Days EMA (Exponential Moving Average) and 50-Days SMA (Simple Moving Average) levels are acting as strong resistance levels for NIFTY. 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 4965 / 4990 / 5025 levels. At the same time, 4915 / 4880 / 4865 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 34.38 and 38.79, respectively.
2. MACD (26 Days & 12 Days): Their Values are -68.79 and -41.47, respectively. a negative crossover is indicated by both the Moving Averages.
3. +DI: 12.52, -DI: 40.50, ADX: 30.41: 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 5208.50 and 5102.24. Both the Moving Averages are now acting as Strong Resistance levels for NIFTY.

Stocks in Focus:

TATAPOWER Sell below 1252 for the Target of 1230, with the Stop Loss of 1262.

MARUTI Buy above 1245 for the Target of 1265, with the Stop Loss of 1235.

JINDALSTEL Buy above 640 for the Target of 650 & 652, with the Stop Loss of 632.

ROLTA Buy above 173.50 for the Target of 178, with the Stop Loss of 171.