Nifty Outlook for 30th August 2010

On Friday, NIFTY made a Long Black Candlestick on the Daily Charts. Markets witnessed a good selling pressure on the last day of the week, as Cabinet approved the Direct Tax Code Bill in which the Corporate Tax Rate has been reduced to 30% from the current rate of 33.6% and also MAT of 20% has been levied, which disappointed the markets too. Till the second half of the trading session, a good run up was witnessed in the markets particularly led by STEEL Stocks, due to which NIFTY made a high of 5495.20 for the day. But after the opening of the European Markets, a good selling pressure was witnessed, led by BANKING & FINANCE, REALTY & INFRA and TEXTILES. For the day, NIFTY made a low of 5391.95 Hence, it can be said that a choppy session, with which NIFTY ended at 5408.70 for the day. 

A bit of flattish session with a positive bias is expected tomorrow, as US Q2 GDP Data was much better than the market expectations and also UK will be witnessing a Trading Holiday on account of Summer Bank Holiday. A good trading momentum will also be witnessed in OMCs Stocks like, HINDPETRO, IOC, BPCL, GAIL, PETRONET and MRPL, as for the first time after the deregulation of the petrol prices, the companies raised the petrol prices by up to Rs. 0.70/liter. Only Stock and Sector specific momentum will be observed as markets are trading range bound. Traders are suggested to follow very cautious approach by following Strict Stop Losses in Intraday Trading.

5350 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 5425 / 5440 / 5462 levels. At the same time, 5382 / 5365 / 5350 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 46.32 and 55.38, respectively.
2. MACD (26 Days & 12 Days): Their Values are 25.31 and 33.66, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 19.33, -DI: 24.57, ADX: 20.26: 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 5392.81 and 5455.28.

Stocks in Focus:

GAIL                          One may go for long, only if it trades above 463.80 for the targets of 471 & 472, with Strict Stop Loss of 460.

PANTALOONR        One may go for long, only if it trades above 478 for the targets of 487 & 490, with Strict Stop Loss of 470.

PATNI                       One may go for long, only if it trades above 553 for the targets of 564 & 566, with Strict Stop Loss of 545.