Nifty Outlook for 16th August 2010

On Friday, NIFTY made a Long White Candlestick, with a longer upper shadow, signaling bulls were pulled back by the bears, in the latter half of the trading session. NIFTY opened above the major support of 5416 at around 5430 and made a high of 5476.50 for the day, with purely Sector Specific movement. TEXTILES (The Reserve Bank of India (RBI) extended the interest subsidy scheme of two percentage points on rupee export credit to additional sectors like leather manufacturers, engineering goods and textiles), REALTY & INFRA, BANKING & FINANCIALS and AIRLINE led the rally for the day. A muted session was witnessed with the announcement of Euro Zone Q2 GDP at 1% Vs 1.7% (on YoY Basis). Finally, for the day NIFTY closed at 5452.10.

A bit of skittish session may be witnessed on Monday, as JAPAN is going to announce its Q2 GDP Numbers, which may signal the slowing of economy. 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 / 5495 levels. At the same time, 5430 / 5415 / 5400 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 57.12 and 57.44, respectively.
2. MACD (26 Days & 12 Days): Their Values are 33.51 and 40.91, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 22.82, -DI: 17.58, ADX: 23.13: 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 5325.42 and 5417.37.

Stocks in Focus:

ABIRLANUVO              One may go for long, only if it trades above 825 for the targets of 835 & 842, with Strict Stop Loss of 818.

CESC                              One may go for long, only if it trades above 400 for the targets of 408 & 411, with Strict Stop Loss of 393.

SRF                                 One may go for long, only if it trades above 262 for the targets of 257 & 268, with Strict Stop Loss of 257.