Nifty Outlook for 26th July 2010

On Friday, NIFTY made Doji Candlestick on the Daily Charts. With the help of strong global cues, NIFTY had a gap up opening, with which it made a high 5477.50. An indecisive move was observed, with a major Stock and Sector specific momentum. Till the second half of trading session, NIFTY slipped a bit till the levels of 5435.15. A bit of uncertainty was also witnessed in the European Markets as the EU (European Union) was about to announce the Stress Test results of the European Banks, but at the same time the Euro Zone reported an unexpected increase in the Q2 GDP Data, which again gave a bounce to the markets. Hence, for the day, it closed at 5449.10 (making it a second continuous session to give closing above the levels of 5400).  

A positive move or say a Gap Up opening is expected on Monday, as only 7 banks out of 91 failed the EU (European Union) Stress Test, the results were much better than the market expectations, with a again the Metals, Financials and Realty & Infra Stocks buzzing.

A good trading momentum will be witnessed in the Financials, Oil Marketing Companies, Realty & Infra Stocks, as the major Big Boys are going to announce their quarterly results, the very next week and at the same time RBI (Reserve Bank of India) is going to declare its Credit Policy on 27^th July, 2010 (Tuesday). 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.

5250 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 5495 and 5500 in the 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 5460 / 5475 / 5490 levels. At the same time, 5430 / 5416 / 5395 will act as major intraday support levels.

 What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 65.08 and 61.69, respectively.
2. MACD (26 Days & 12 Days): Their Values are 57.93 and 54.91, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 27.89, -DI: 10.48, ADX: 28.34: 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 5195.042 and 5348.15.

Stocks in Focus:

MTNL                         One may go for long, only if it trades above 68.20 for the targets of 70 & 70.50, with Strict Stop Loss of 67.30.

LUPIN                         One may go for long, only if it trades above 1910 for the target of 1940, with Strict Stop Loss of 1886.

HINDPETRO              One may go for short, only if it trades below 430 for the targets of 424 & 420, with Strict Stop Loss of 436.