Nifty Outlook for 11th August 2010

Yesterday, on the Daily Charts NIFTY made a Short Black Candlestick. Markets opened very flattish with a negative bias and traded range bound till the first half of the trading session, with a good up run in Metals and Realty & Infra stocks. When markets were nearing the second half, a good selling pressure entered the markets as China's exports rose 38.1% in July, compared to the year-earlier period, but at the same time this increase was below June's 43.9% rise. This data led a good selloff in the Chinese and European markets as well. NIFTY dragged till the levels of 5445.35 for the day, and also the trading stocks dipped around 3-4%. The other reason for the muted movement in NIFTY and a good sell off in stocks was the announcement of Interest Rate Decision by US Federal Reserve, awaited late in the evening. Finally for the day, NIFTY closed at 5460.70.

A bit of range bound session may be witnessed tomorrow, as US Federal Reserve is going to announce its interest rate decision late in the evening. 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 5500 / 5520 / 5550 levels. At the same time, 5445 / 5430 / 5400 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 59.13 and 59.93, respectively.
2. MACD (26 Days & 12 Days): Their Values are 43.22 and 44.03, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 21.74, -DI: 11.85, ADX: 26.56: 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 5304.95 and 5412.67.

Stocks in Focus:

BOMDYEING                One may go for long, only if it trades above 607 for the targets of 617 & 620, with Strict Stop Loss of 597.

HINDPETRO                  One may go for long, only if it trades above 455 for the targets of 463 & 465, with Strict Stop Loss of 448.

CESC                              One may go for short, only if it trades below 390 for the targets of 386 & 384, with Strict Stop Loss of 394.