Nifty Outlook for 29th May 2010

Yesterday, on the daily charts, NIFTY made a White Opening Marubozu Candlestick, signaling that it was a typical bull day and strength of the bulls is enough to cause some concern among the bears. NIFTY had a good opening with almost 18-20 points in upside. At the starting of the trading session, markets were led by OMC (Oil Marketing Companies) Scrips only, which were almost 5-10% up, as the Group of 20 nations has welcomed the strategies by member countries to phase out oil subsidies. In the second half, after the opening of European Markets, NIFTY had a good up move up to 5339.45 levels (after crossing its important intraday resistance of 5315), as the leaders of Group of 20 major economies agreed on common goals to reduce deficits and debt. Finally, for the day NIFTY closed at 5233.50, ending all the NIFTY Constituents at good levels for tomorrow.

Markets may again have a good bull run tomorrow. A good trading momentum will be observed in Sector Specific and other specific stocks, but then too traders should follow a cautious approach by following Strict Stop Losses.

20-Days EMA (Exponential Moving Average) has crossed the 50-Days SMA (Simple Moving Average), giving a positive clue for short term. MACD (Moving Average Directional Index) and RSI (Relative Strength Index) have turned positive. Traders may take delivery basis position in the stocks turning from their oversold territory and make smart gains.

For the day, intraday resistance for NIFTY comes at 5350 / 5365 / 5380 levels. At the same time, 5315 / 5290 / 5275 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 61.76 and 60.35, respectively.
2. MACD (26 Days & 12 Days): Their Values are 66.01 and 51.66, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 28.81, -DI: 18.73, ADX: 20.76: 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 5142.03 and 5213.02.

 Stocks in Focus:

PUNJLLOYD             One may go long only if it trades above 136 for the targets of 140 & 142, with the Stop Loss of 130.

BAJAJHIND              One may go long only if it trades above 121 for the targets of 127 & 131, with the Stop Loss of 114.