Nifty Outlook for 03rd August 2010

Yesterday, on the Daily Charts NIFTY made Bullish Engulfing Candlestick, representing a good buying interest in the markets. NIFTY had a gap up opening of about 35 to 40 points, and traded positively for whole of the trading session. For the day, NIFTY made a high of 5351.30. After the second half of trading session, with the opening of European Markets, NIFTY had a good run up, sustaining above the levels of 5416. Markets witnessed a good up run, due to the announcement of Euro Zone Manufacturing PMI (Purchasing Managers Index) which rose in July to 56.70 from 55.60 in June and the data was the highest in three months, largely driven by a surge in German Production Activity. This data and the excellent quarterly results of HSBC and BNP Paribas also helped the run up in the markets around the globe. For the day, NIFTY made a low of 5351.30 (below the 20-Days EMA of 5375.33). Again a good sector and stock specific movement was witnessed. Finally for the day, NIFTY closed at 5431.65. 

A good trading momentum may be witnessed in the Banking & Financial Stocks and Metal stocks. Only Stock and Sector specific momentum will be observed as results season is running, but then too traders should follow a cautious approach by following Strict Stop Losses.

5315 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. 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 5440 / 5460 / 5475 levels. At the same time, 5416 / 5400 / 5380 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 59.22 and 58.78, respectively.
2. MACD (26 Days & 12 Days): Their Values are 42.87 and 51.72, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 21.13, -DI: 15.07, ADX: 26.16: 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 5247.14 and 5375.33.

Stocks in Focus:

BHARTIARTL               One may go for long, only if it trades above 320 for the targets of 326 & 329, with Strict Stop Loss of 316.

HINDALCO                    One may go for long, only if it trades above 165 for the targets of 168 & 169, with Strict Stop Loss of 162.45.

INDIAINFO                    One may go for long, only if it trades above 93.60 for the targets of 95.20 & 96, with Strict Stop Loss of 92.