Nifty Weekly Outlook (23rd to 27th August 2010)

Last Week ending on Friday (20^th August 2010) NIFTY gained around 1.44% and closed at 5530.65 as compared to the last week’s closing of 5452.10. Continuing the uptrend and also the rising consolidation pattern, NIFTY made a Small White Candlestick on the weekly charts. 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 NIFTY made a New-52 Week High also the 42-Months High of 5546.60, after breaking the high of 5545 made in February 2008. On Tuesday, Japan declared its Q2 GDP Numbers, which gave a clue of weakening economy. Japan's gross domestic product (GDP) grew 0.1% in April-June, translating into an annualized increase of 0.4 per cent, well below market forecasts, after revised 4.4% annualized growth in the first three months of the year. Due to the announcement of such a disappointing data, NIFTY made a low of 5397.40 for the week. A purely Sector and Stock Specific play was witnessed in the last week. TEXTILE, CEMENT, REALTY & INFRA, BANKING,

FERTILIZER & CHEMICALS, TECH, OMCs, PHARMA & AIRLINE Sectors witnessed a good run up in the last week. NIFTY has moved much above its 40-Days EMA (Exponential Moving Average) of 5119.73 and 20-Days EMA of 5443.39.

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, unemployment and housing reports Data are going to be announced. In Europe, Global mining giant BHP is going to report annual results, cosmetics group L'Oreal too is going to release second-quarter sales Data. In Asia, Japan's CPI, BHP Billiton's earnings outlook take center stage as investors look for more clues about the global economy. And Australian election results could impact mining stocks.

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 5560 / 5595 / 5615 will act as an important resistance, whereas the level of 5500 / 5460 / 5415 will act as an important support for NIFTY.