Nifty Weekly Outlook

Last Week ending on Friday (07^th August 2010) NIFTY gained around 1.33% and closed at 5439.25 as compared to the last week’s closing of 5367.60. On the weekly charts, NIFTY has made a Small White 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 the major rally was witnessed due to the rise in Euro Zone Manufacturing PMI (Purchasing Managers Index) in July to 56.70 from 55.60 in June and the data was the highest in three months, largely driven by a surge in German Production Activity. Due to the results season arrival both in local and international markets, markets are trading very range bound, but then too indicating that the uptrend is present in the market. In last week, NIFTY dragged till the levels of 5487.15 (posting the low level for the week) and a high of 5466.25. NIFTY has moved much above its 40-Days EMA (Exponential Moving Average) of 4995.85 and 20-Days EMA of 5399.34.

The next week RELCAPITAL, TATAMOTORS, BHARTIARTL, RENUKA, SBI, IVRCLINFRA are going to announce their Quarterly Results.

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, Fed will be taking decision on the interest rates. In Europe, the first release of second-quarter GDP data in France, Germany and the euro-zone will be the main economic focus, with earnings from Switzerland's Nestle and the world's largest brewer, Anheuser-Busch InBev, also set to be closely scrutinized. In Asia, Beijing could tighten its monetary policy further if next week's CPI data turn out too high. Meanwhile, rate decisions from Bank of Japan and Bank of Korea are expected.

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 5380 / 5330 / 5290 will act as an important support for NIFTY.