Nifty Weekly Outlook (16th to 21st August 2010)

Last Week ending on Friday (13^th August 2010) NIFTY gained around 0.24% and closed at 5452.10 as compared to the last week’s closing of 5439.25. On the weekly charts, NIFTY has made a Long Legged Doji Candlestick. As seen on the charts, NIFTY is forming a bullish consolidation pattern, with higher highs and higher lows, but at the same time RSI (Relative Strength Index) is forming lower highs, signaling a Negative Divergence, which is also a sign of caution that this consolidation pattern may turn into a Bearish Consolidation Pattern.  Last week was very eventful, due to which a good trading momentum was witnessed in the Markets. Major Economic Data announced in the Asian Markets impacted the movement in all the world markets. On Monday, NIFTY climbed and made a new 52-week high, as German exports rose by 3.8% in June as compared to May; this led to a good up run in the European as well as Indian Markets. From the next trading session, NIFTY continuously dipped for three trading sessions and made a low of 5372.45 for the week, primarily impacted by Chinese and Japanese Economic Data. India also announced its June IIP Data which was at 7.10% Vs 11.50% (MoM). Stellar quarterly Numbers were posted by both TATAMOTORS &

SBIN, which led the stocks to make new life-time high and at the same time held the Markets strong. NIFTY has moved much above its 40-Days EMA (Exponential Moving Average) of 5098.66 and 20-Days EMA of 5417.37.

All the major International Indices bounced back from their crucial support levels which may now invite a good up run. For the next week, a good trading momentum will be observed in Sector Specific and other specific stocks, but then too traders should follow a cautious approach by following strict Stop Losses.

On the Global front, in US, Retail and tech earnings take center stage, with Hewlett-Packard, Dell, Wal-Mart, Target and Home Depot set to report. General Motors may launch year's biggest IPO to return to public markets. In Europe, U.K. inflation data will be in focus towards the start of the week, along with more information on the Bank of England's most recent decision on interest rates, with earnings from Swiss cement producer Holcim among the corporate highlights. In Asia, Japan is going to announce its GDP growth, which is likely to have been slowed in second quarter because of cooling consumer demand. Chinese computer giant Lenovo lead earnings list. 

With the ongoing uncertain global environment and results season, traders are suggested to trade cautiously by following Strict Stop Losses and avoid making fresh investments at this point of time.

For the next week, the level of 5500 / 5550 / 5580 will act as an important resistance, whereas the level of 5330 / 5270 / 5240 will act as an important support for NIFTY.