Nifty Outlook for 05th July 2010

On Friday, NIFY made a Hammer Candlestick Pattern on the Daily Charts.  Markets opened flattish with negative bias and only stock specific momentum was observed. NIFTY traded very range bound between 5245 and 5275 levels for the day. Some buying attraction was visible in the IT Stocks and Fertilizer Stocks only. In the second half of the trading session, after the opening of European Markets, a small selling pressure was visible which dragged it to the level of 5225.60. Finally, for the day NIFTY closed at 5237.10.

In the late evening, Reserve Bank of India (RBI) raised both the Reverse Repo and Repo Rate, which may not impact the market sentiments that much. 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 5229.42, by making a low of 5225.60 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 5255 / 5270 / 5282 levels. At the same time, 5215 / 5180 / 5160 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 52.27 and 56.817.95, respectively.
2. MACD (26 Days & 12 Days): Their Values are 48.76 and 60.41, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 20.88, -DI: 18.77, ADX: 17.43: 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 5142.21 and 5229.42.

Stocks in Focus:

MPHASIS                   One may go long only if it trades above 600 for the target of 613, with tight Stop Loss of 592.

M&M                           One may go short only if it trades below 600 for the target of 588, with tight Stop Loss of 610.

HCLTECH                  One may go short only if it trades below 350 for the targets of 345 & 342, with tight Stop Loss of 354.