Nifty Outlook for 13th July 2010

On the Daily Charts NIFTY made Bearish Deliberation Pattern, signaling that the rally is losing strength and a reversal is possible. The formation is a proof that the bulls’ strength is at least temporarily exhausted. NIFTY had a gap up opening of about 20-30 points and opened well above its resistance of 5365 and made a high of 5402.70 for the day. After the announcement of bad IIP Data for the month of May, which was at 11.50% Vs 17.60% (MoM), NIFTY made a low of 5351.60. Again NIFTY bounced back for the day from this level of day’s low and finally closed at 5383 for the day.

A good trading momentum will be observed in Sector Specific and other specific stocks, as results season has arrived and INFOSYSTCH is going to announce its results tomorrow, but then too traders should follow a cautious approach by following Strict Stop Losses. 5230 is the major Support which has to be breached to prove the weakness, and unless the NIFTY is trading above this level, the Markets are positive.

NIFTY is now trading well above its 20-Days EMA of 5264.91. 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 5395 / 5415 / 5430 levels. At the same time, 5365 / 5348 / 5330 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 61.76 and 57.34, respectively.
2. MACD (26 Days & 12 Days): Their Values are 47.58 and 46.24, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 28.06, -DI: 13.19, ADX: 18.87: 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 5146.15 and 5264.91.

Stocks in Focus:

MUNDRAPORT                    One may go long only if it trades above 750 for the target of 765, with tight Stop Loss of 740.

WOCKPHARMA                   One may go long only if it trades above 136 for the targets of 139 & 141, with tight Stop Loss of 133.

NAGARCONST                    One may go short only if it trades below184 for the targets of 181 & 179.50, with tight Stop Loss of 186.