Nifty Outlook for 30th May 2010

Yesterday, on the daily charts, NIFTY made a Black Opening Marubozu Candlestick, signaling that it was a day of the bears; it may show either the continuation of a downtrend or a final sell off attempt just before the bulls regain control. This candle engulfed the previous day’s candle (White Opening Marubozu) too and made a low of 5235.80. Markets opened down almost 20-35 points, and with the deepening losses in Chinese and Japanese markets, dipped further by breaking crucial intraday support levels. The negative tone began overnight with a downward revision of an economic indicator for China and sparked selloffs in Asia and Europe. China's main share index tumbled 4.3% to close at a 14-month low, led lower by financial stocks as investors sized up the growth outlook for the second half. Finally, for the day NIFTY closed at 5256.15, ending all the NIFTY Constituents at good levels for tomorrow.

Markets may be a bit skeptical 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 5260 / 5285 / 5300 levels. At the same time, 5235 / 5215 / 5180 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 54.80 and 59.24, respectively.
2. MACD (26 Days & 12 Days): Their Values are 60.91 and 56.03, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 26.20, -DI: 20.25, ADX: 20.19: 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 5142.55 and 5217.13.

Stocks in Focus:

HDFCBANK              One may go short only if it trades below1895 for the targets of 1876 & 1868, with the Stop Loss of 1910.

HINDALCO                One may go short only if it trades below142 for the target of 138, with the Stop Loss of 146.

TCS                            One may go short only if it trades below751 for the targets of 739 & 738, with the Stop Loss of 758.