Nifty Outlook for 22nd July 2010

Yesterday, on the Daily Charts, NIFTY made a Long White Candlestick, after making two Doji Candlesticks since last two days, which gives a positive signal for the markets. NIFTY had a strong opening and also made a high of 5409.10 for the day. A good trading momentum was witnessed throughout the trading session, with Metal Sector leading the gains. European Markets also helped the Indian Markets to sustain above the levels of 5368 (day’s low) in the second half of the trading session. Finally, for the day, it closed at 5399.35.

A good trading momentum will be witnessed in the financials and tech stocks, as Morgan Stanley and Wells Fargo posted the results which were better than the market expectations. Hence, 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 5415 / 5430 / 5450 levels. At the same time, 5375 / 5355 / 5330 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 61.09 and 59.92, respectively.
2. MACD (26 Days & 12 Days): Their Values are 53.09 and 52.62, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 23.29, -DI: 12.05, ADX: 26.04: 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 5183.04 and 5326.53.

Stocks in Focus:

WIPRO                       One may go long it only if it trades above 417 for the targets of 423 & 424, with Strict Stop Loss of 412.

SESAGOA                 One may go long it only if it trades above 368 for the targets of 376 & 380, with Strict Stop Loss of 360.

MUNDRAPORT       One may go short only if it trades below 728 for the target of 714, with strict Stop Loss of 740.