Nifty Outlook for 18th August 2010

Yesterday, on the Daily Charts, NIFTY made a Small Black Candlestick, with a short lower shadow, touching its major support of 5408.80. Markets opened flat at around 5430-5440 and made a high of 5443.55 for the day. For the whole day, NIFTY traded very range bound. Purely sector and stock specific play was witnessed in the Markets. There was no specific trigger for the market to give it a move. Finally, for the day NIFTY closed at 5414.15 (a crucial support for the NIFTY).  Sectors like ENTERTAINMENT, METALS, OMCs, TEXTILES, AIRLINE, BANKING (especially small banking stocks) showed a good upside.

An upside movement in the markets can be expected tomorrow, as US’ Industrial Production for June Month rose 1.1% as compared to the fall of 0.6% in June and also the Capacity utilization rose to 74.8% in July from 74.1% in the previous month. 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 5435 / 5460 / 5475 levels. At the same time, 5400 / 5380 / 5365 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 51.85 and 55.52, respectively.
2. MACD (26 Days & 12 Days): Their Values are 26.08 and 37.36, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 19.96, -DI: 17.53, ADX: 20.84: 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 5341.64 and 5417.14.

Stocks in Focus:

HDIL                           One may go for long, only if it trades above 293.60 for the targets of 303 & 306, with Strict Stop Loss of 288.

IDBI                            One may go for long, only if it trades above 128.60 for the targets of 131.50 & 132.60, with Strict Stop Loss of 127.30.

HCLTECH                   One may go for short, only if it trades below 394 for the targets of 389.60 & 388, with Strict Stop Loss of 127.30.