Nifty Outlook for 20th August 2010

Yesterday, on the Daily Charts, NIFTY made a White Opening Marubozu Candlestick, which signals that it was a typical bull day and strength of the bulls was enough to cause some concern among the bears.  Yesterday, NIFTY touched its 42-month high of 5545 by making a high of 5544.70 for the day. NIFTY opened flat with a positive bias and then climbed in a staircase way. All the markets around the globe were surging with hopes for further monetary easing measures bolstering Japan. Yesterday’s move was particularly led by CEMENT, METALS & BANKING Sector.  NIFTY for the day made a low of 5478.10 (the opening level) and made a 30-months high closing of 5540.20.

A bit of profit booking may be witnessed tomorrow as the Weekly Jobless Claims in US were at 9-month high and also the measure of Business Activity in the Philadelphia region sank, which signals that the US Economy looks set to grow at a slower pace than earlier year. Only Stock and Sector specific momentum will be observed as markets are trading range bound. Traders are suggested to follow a cautious approach by following Strict Stop Losses in Intraday Trading.

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 5560 / 5580 / 5595 levels. At the same time, 5530 / 5510 / 5490 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 64.74 and 57.96, respectively.
2. MACD (26 Days & 12 Days): Their Values are 34.26 and 34.70, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 28.74, -DI: 14.60, ADX: 21.60: 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 5360.45 and 5434.20.

Stocks in Focus:

FEDERALBNK          One may go for long, only if it trades above 360 for the targets of 368 & 370, with Strict Stop Loss of 353.

ACC                         One may go for long, only if it trades above 884 for the targets of 898 & 900, with Strict Stop Loss of 874.