Nifty Outlook for 02nd September 2010

Yesterday, on the Daily Chart, NIFTY made a Long White Candlestick, indicating the return of bulls, with a bit of short covering. NIFTY opened had a positive opening of almost 30-40 points, and then traded range bound in 10-15 points till opening of the European Markets. After the opening of European Markets, NIFTY first dragged till the levels of 5402.40 and again bounced back to day’s high of 5478.60. Rally around the Globe was primarily led by China and Australia. China's official purchasing managers' index rose to 51.7 in August from 51.2 in July, a reading over 50 indicates an increase in manufacturing activity. The Australian economy grew 1.2% on a seasonally adjusted basis in the three months to end-June. On a trend basis, second-quarter GDP rose 0.9%, bringing annual growth to 3.2% and market expected its at 2.8%.  Finally for the day, NIFTY ended at 5471.85. Sectors like METALS, OMCs, REALTY & INFRA, BANKING, TEXTILES, FERTILIZERS, PSUs (Disinvestment Candidates), MINERS and SUGARS had a good run up.

A Gap up opening may be witnessed tomorrow with an extended range bound trading, with the buoyed Global Indices and Declining Dollar. A good set of Economic Data are going to be announced in Europe (EMU Q2 GDP Data, ECB Interest Rate Decision, EMU Producer Price Index). A good trading momentum is expected in TEXTILES, METALS, REALTY & INFRA and BANKING & FINANCE Sectors. 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.

After breaching an important support of 5350 day before yesterday, NIFTY opened above its 50-Days SMA (Simple Moving Average) 5398.75 and moved above the 20-Days EMA (Exponential Moving Average) of 5449.20. As long as NIFTY is trading above 5350 levels, traders and investors are suggested to avoid positional shorts.

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 5490 / 5520 / 5535 levels. At the same time, 5450 / 5420 / 5400 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 53.98 and 52.49, respectively.
2. MACD (26 Days & 12 Days): Their Values are 13.98 and 29.01, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 22.30, -DI: 23.30, ADX: 18.66: 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 5398.75 and 5449.20.

Stocks in Focus:

ACC                      Buy at the levels of 888-889 for the Targets of 902 & 906, with the strict Stop Loss of 876.

HINDALCO          Buy only if it trades above 175 for the Targets of 178 & 179.30, with the strict Stop Loss of 173.30.

NAGARCONST    Buy at the levels of 156.80-157 for the Targets of 162 & 163, with the strict Stop Loss of 154.60.

SESAGOA         Buy only if it trades above 328 for the Targets of 335 & 340, with the strict Stop Loss of 322.

IVRCLINFRA    Buy at the levels of 158-159 for the Targets of 163 & 164, with the strict Stop Loss of 156.

GUJNRECOKE         Buy only if it trades above 57.30 for the Targets of 58.60 & 59, with the strict Stop Loss of 56.