Nifty Outlook for 06th September 2010

On Friday, NIFTY made a Short Black Candlestick on the Daily Chart, as expected a bit of profit booking was witnessed in the markets. NIFTY had a gap up opening as expected, due to strong global cues with almost 30-40 points upside and made a high of 5510.40 for the day. For whole of the day, it traded in the positive territory, and could not even breach the intraday support of 5470, a purely stock and sector specific movements were witnessed again. For the day, NIFTY tested a low of 5471.85 and finally for the day ended at 5479.40. Sectors like FERTLIZER, SUGAR, ENTERTAINMENT & MEDIA, PHARMA and BANKING & FINANCIAL had a good run up.

A gap up opening is expected in the markets for tomorrow, which may convert into a muted session for the rest of the day. U.S. lost 54,000 nonfarm jobs in August. The decline was smaller than the expectation of 105,000. US will be witnessing holiday for Monday on account of Labor Day. 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.

NIFTY is now trading above its 50-Days SMA (Simple Moving Average) 5406.26 and the 20-Days EMA (Exponential Moving Average) of 5455.26. 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 maintained above the 50-Days SMA (Simple Moving Average), supporting the recent positive move. MACD (Moving Average Directional Index) and RSI (Relative Strength Index) have also maintained the positive trend. 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 / 5515 / 5540 levels. At the same time, 5470 / 5445 / 5420 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 54.58 and 53.39, respectively.
2. MACD (26 Days & 12 Days): Their Values are 15.99 and 29.01, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 24.29, -DI: 21.09, ADX: 17.07: 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 5406.26 and 5455.26.

Stocks in Focus:

INDHOTEL          Buy only if it trades above 108 for the Targets of 110 & 111.40, with the strict Stop Loss of 106.20.

RELCAPITAL        Buy only if it trades above 789 for the Targets of 806 & 808, with the strict Stop Loss of 778.

WOCKPHARMA Buy only if it trades above 240 for the Targets of 247.50 & 251, with the strict Stop Loss of 233.

BIOCON           Buy only if it trades above 348.60 for the Targets of 353 & 355, with the strict Stop Loss of 344.

TATACHEM      Buy only if it trades above 413 for the Targets of 421 & 425, with the strict Stop Loss of 408.

GICHSGFIN      Buy only if it trades above 142 for the Targets of 147.50 & 148.60, with the strict Stop Loss of 139.50.