Nifty Outlook for 16th July 2010

Yesterday, on the Daily Charts NIFTY made a Spinning Top Candlestick, proving the underlying indecision in the markets after the formation of High Wave Candlestick with negative bias, the day before. Stock and Sector specific movement was again observed in the market, as the results season is running. NIFTY had a sluggish movement for whole of the trading session, except in the last trading hour of the day. Till the second half of the trading session, NIFTY had a downward movement which dragged it till the levels of 5360.60. After, the second half markets had a bounce from the days low and made a high of 5399.20 (at the same time a good bounce was observed in Euro Currency and Swiss Franc). Finally, for the day, it closed at 5378.87.

A bit of trading momentum can be seen in the financial and tech stocks, as the results of TCS and JP Morgan Chase were better than Market’s expectation. The results of Google & AMD will be announced in US (late in the evening) and the results of Bank of America & Citigroup are to be announced the other day.

A good trading momentum will be observed in Sector Specific and other specific stocks, as results season has arrived, 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. If NIFTY closes above 5400 levels, for continuously two-three trading sessions, it may touch the levels of 5430 and 5450 in coming days.

20-Days EMA (Exponential Moving Average) has crossed the 50-Days SMA (Simple Moving Average), supporting the recent positive move. 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, 5350 / 5335 / 5315 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 60.46 and 59.30, respectively.
2. MACD (26 Days & 12 Days): Their Values are 55.18 and 46.01, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 28.38, -DI: 12.20, ADX: 23.13: 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 5162.18 and 5296.78.

Stocks in Focus:

UNIONBANK             One may go long it at the levels of 324-325 for the target of 335, with tight Stop Loss of 320.

SCI                              One may go short only if it trades below 156.30 for the targets of 154.20 & 153.70, with tight Stop Loss of 158.