Nifty Outlook for 23rd July 2010

Yesterday, on the Daily Charts, NIFTY made a Long White Candlestick, beating all the weakness and making it’s the Highest Closing since February, 2008. The markets traded range bound till the second half of the trading session and kissed the levels of 5400 twice. Purely, sector specific rally was witnessed till the second half. After the announcement of strong Euro-zone PMI (Purchasing Managers Index) data gave a good spurt to the European markets, which also lifted NIFTY till the levels of 5447.15. The Euro-zone data released, offered further evidence that the region's recovery remains on track despite the sovereign-debt crisis, with a gauge of July private-sector activity rebounding unexpectedly to a three-month high and a measure of May industrial orders showing an unexpected rise. Finally, for the day NIFTY closed at 5441.95.

A good trading momentum will be witnessed in the tech stocks, as Microsoft is going to announce its quarterly results (late in the evening). Also a decisive day in Europe tomorrow, as EU (European Union) regulators are going to release the Bank Stress Results and in US, in the evening, Ford and McDonald’s are also going to announce their quarterly results. 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 5468 / 5480 / 5495 levels. At the same time, 5435 / 5416 / 5395 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 64.52 and 60.84, respectively.
2. MACD (26 Days & 12 Days): Their Values are 55.84 and 53.76, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 25.63, -DI: 11.02, ADX: 27.03: 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 5188.30 and 5337.52.

Stocks in Focus:

APIL                           One may go long it only if it trades above 650 for the targets of 660 & 662, with Strict Stop Loss of 644.

SCI                              One may go long it only if it trades above 160.60 for the target of 163.30, with Strict Stop Loss of 157.90.

SINTEX                      One may go long it only if it trades above 370 for the targets of 376 & 380, with Strict Stop Loss of 366.