Nifty Outlook for 21st July 2010

Yesterday, on the Daily Charts, NIFTY made a Doji Candlestick, again after making a Doji Candlestick the previous day too, which signifies a loss of sense of direction and that there, is a great amount of indecision in the market. NIFTY had a gap up opening of about 25-30 points and made a high of 5416.45 for the day, due to positive global cues, and till the second half of trading session had a very range bound movement of around 10-15 points. After the second half, a good selling pressure was witnessed, which dragged NIFTY till 5353.60. Metals and Realty sectors did not allow the markets to lose its strength till the end, a stock and sector specific movement was observed, as expected. Finally, for the day, it closed at 5368.

A bit of selling pressure can be witnessed in the financials and tech stocks, as the quarterly results of IBM and Goldman Sachs, were worse than the market expectations. The other day Coca-Cola and Morgan Stanley are going to announce their quarterly results and also President Barack Obama is going to sign the Historical Financial Reform Bill.  

Only Stock and Sector specific momentum will be observed 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 5385 / 5400 / 5420 levels. At the same time, 5350 / 5330 / 5300 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 58.33 and 59.62, respectively.
2. MACD (26 Days & 12 Days): Their Values are 53.15 and 50.60, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 24.45, -DI: 12.64, ADX: 25.60: 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 5178.19 and 5318.86.

Stocks in Focus:

GVKPIL                      One may go long it only if it trades above 47 for the targets of 48.80 & 49, with Strict Stop Loss of 46.50.

BAJAJHIND              One may go short only if it trades below 113.60 for the target of 110.96, with strict Stop Loss of 115.