Nifty Outlook for 26th May 2010

Yesterday, on the daily charts, NIFTY made a Long Black Candlestick, which shows the presence of underlying weakness, as is being depicted by the indicators since last week. NIFTY had a gap down opening due to weak global cues and with the deepening selling pressure in the second half of the trading session made a low of 4786.45. Steps taken by the Spanish Government to merge all the Big Banks to a single Entity led the downfall since yesterday, as the concerns over the European Economy raised further. All the major Asian Indices were down due to the collapse of their Individual Currencies at the international level. A high degree of negative news flow all over the globe led to the Bloodshed; hence the global markets collapsed around 2% to 3%. Finally for the day NIFTY closed at 4806.75. A bit of short covering is expected in the markets for the next two days, as F&O Expiry is on Thursday, 27^th May 2010.

Now, if for next 2-3 trading sessions if NIFTY closes below 4785, it may drag till the levels of 4725 or 4700. On the Weekly Charts too, NIFTY has breached its important support of its 40-Days EMA of 4914.35, which may 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 4830 / 4870 / 4900 levels. At the same time, 4770 / 4740 / 4710 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 28.96 and 36.33, respectively.
2. MACD (26 Days & 12 Days): Their Values are -85.50 and -52.61, respectively. a negative crossover is indicated by both the Moving Averages.
3. +DI: 15.85, -DI: 42.91, ADX: 31.81: 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 5198.52 and 5060.46. Both the Moving Averages are now acting as Strong Resistance levels for NIFTY.

Stocks in Focus:

ACC Sell below 838 for the Target of 825, with the Stop Loss of 845.

BHEL Sell below 2250 for the Target of 2230 & 2220, with the Stop Loss of 2260.

CANBK Sell below 392 for the Target of 388 & 385, with the Stop Loss of 397.

HDFC Sell below 2600 for the Target of 2565, with the Stop Loss of 2635.

INFOSYSTCH Sell below 2510 for the Target of 2470, with the Stop Loss of 2550.

JSWSTEEL Sell below 983 for the Target of 968, with the Stop Loss of 996.

PFC Sell below 277 for the Target of 270, with the Stop Loss of 280.

SBIN Sell below 2138 for the Target of 2100, with the Stop Loss of 2155.

SUNPHARMA Buy above 1610 for the Target of 1630, with the Stop Loss of 1590.