Nifty Outlook for 02nd July 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. Markets had a gap down opening of almost 40-50 points, after the warning of Moody’s to downgrade Spain to negative and also after the announcement of China’s manufacturing at a slower pace for a second month in June, adding to signs that growth in the world’s third-largest economy is moderating. NIFTY made a low of 5232.10 before the second half of the trading session, and traded range bound till closing. Finally, for the day NIFTY closed at 5251.40.

Markets may be seeing an up move 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.

NIFTY again touched its 20-Days EMA of 5228.61, by making a low of 5232.10 for the day, but managed to close well above it. 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 5265 / 5280 / 5295 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 53.41 and 57.95, respectively.
2. MACD (26 Days & 12 Days): Their Values are 55.00 and 60.83, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 21.92, -DI: 19.08, ADX: 18.36: 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 5143.55 and 5228.61.

Stocks in Focus:

SRTRANSFIN           One may go long only if it trades above 595 for the target of 605, with tight Stop Loss of 585.

UNIONBANK             One may go long only if it trades above 315 for the target of 319, with tight Stop Loss of 312.

SIEMENS                   One may go short only if it trades below 714 for the target of 700, with tight Stop Loss of 720.