Nifty Outlook for 31st August 2010

Yesterday, on the Daily Chart, NIFTY made a Long Legged Doji Candlestick, indicating the presence of great amount of uncertainty. NIFTY had a gap up opening with almost 45-50 points in the upside, due to positive Global Cues. US’ Q2 GDP Data were better than the markets’ expectations and at the same time Japanese Government agreed to introduce more financial measures to give a boost to the economy. After the gap up opening, NIFTY was not able to maintain above the day’s high of 5469.00. It tested the intraday support of 5400 for whole of the trading session and dipped till the levels of 5390.35, before the presentation of DTC Bill (Direct Tax Code Bill) in the Parliament. Markets reacted negatively to the approval of 20% MAT (Minimum Alternative Tax), increased from the earlier proposed level of 16%. Again only Sectoral and Stock Specific Movement was witnessed in the Markets. A good run up was witnessed in PHARMA & HOTEL Stocks, whereas BANKING & TEXTILE Stocks witnessed a good selloff. Finally, for the day NIFTY ended at 5415.45.

A bit of flattish session is expected tomorrow, as market may decide its move according to its Global peers, because a good set of Economic Data are going to be announce in Japan and Euro Zone. 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 5485 / 5500 / 5520 levels. At the same time, 5400 / 5382 / 5365 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 47.16 and 53.73, respectively.
2. MACD (26 Days & 12 Days): Their Values are 19.27 and 32.91, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 17.46, -DI: 22.39, ADX: 19.69: 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 5394.06 and 5451.49.

Stocks in Focus:

EIHOTEL              Buy only if it trades above 154.70 for the Targets of 158  & 158.40, with the strict Stop Loss of 151.60. 

INDHOTEL          Buy only if it trades above 105.50 for the Targets of 107.20 & 108, with the strict Stop Loss of 104.30.

MPHASIS            Buy only if it trades above 628 for the Targets of 636 & 640, with the strict Stop Loss of 620.