Nifty Weekly Outlook (24th May to 28th May 2010)

Last Week ending on Friday (21^st May 2010) NIFTY lost almost 3.19% and closed at 4931.15 as compared to the last week’s closing of 5093.50. For the latest week ended, NIFTY made a Black Candlestick on the Weekly Charts, which indicates the presence of weakness in the markets that too supported with a spurt in volume. NIFTY is taking strong support at its 40-Days EMA of 4919.87, which it breached too, by making a low of 4842.30. Now if in the next week NIFTY closes below this level, it will call for a Major Correction in the Markets, which may drag it to the levels of 4700 too.

Markets started losing on the weak Global Cues, which were prevailing in the markets right from the last Friday Evening. In this week markets were hit most, when Euro Currency made a 4-year low on Tuesday Evening and at the same time Germany announced a ban on short selling in the markets, which raised a concern over the sentiments of the European Markets. Banning short selling in the bonds and equity markets by Germany without consulting the other European Countries, led to a Blood Shed around the Globe. This week’s selling was observed on account of selling pressure seen in both Chinese and Germany Markets. On Friday Evening too, The Euro Zone package got approved from the Lower and Upper House (which may act as a positive sentiment for the short term, but for the longer term raises the threat of enhanced burden of debt on affected countries of the Euro Zone) and at the same time the Obama Administration got approved the Banks Bill by Senate, which was taken positively by the US Markets. Now on Monday, a flat opening in Green is expected for the Indian Markets.

On the Weekly Charts too, RSI (Relative Strength Index) is making a negative crossover. Hence traders are suggested to trade cautiously by following Strict Stop Losses and avoid making fresh investments at this point of time.

For the next week, the level of 5160 will act as an important resistance, whereas the level of 4745 will act as an important support for NIFTY.