Nifty Outlook for 06th August 2010

Yesterday, on the Daily Charts NIFTY made a Small Black Candlestick. With the continued up movement in the markets, NIFTY opened strongly at the levels of 5472-5475 and made a new high of 5487.15 for the day. For whole of the trading session, till the second half of trading session, NIFTY traded in the range of only 10 to 15 points, proving the presence of uncertainty in the market. After the opening of European Markets, NIFTY struggled a lot to maintain near its new high but at the last hour of the session, NIFTY dipped swiftly till the levels of 5443.10 (at day’s low).  Finally for the day, NIFTY closed at 5447.10.

A good trading momentum may be witnessed in the Financials and Tea 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. 

5330 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 5465 / 5480 / 5500 levels. At the same time, 5425 / 5400 / 5385 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 59.50 and 59.68, respectively.
2. MACD (26 Days & 12 Days): Their Values are 44.03 and 47.82, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 23.39, -DI: 12.78, ADX: 26.27: 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 5279.69 and 5395.14.
Stocks in Focus:
IDFC                                 One may go for short, only if it trades below 182 for the targets of 177 & 176, with Strict Stop Loss of 185.50.
PFC                                    One may go for short, only if it trades below 317 for the target of 310, with Strict Stop Loss of 320.50.