Nifty Outlook for 07th September 2010

Yesterday, on the Daily Charts NIFTY made a Long White Candlestick, showing a strong Buying pressure. As expected NIFTY had a Gap Up opening of almost 30-35 points and maintained its upside by stepping up till the levels of 5589.40. Yesterday NIFTY made a new 52-Week High, with BANKNIFTY too trading at life time high. The rally was primarily led by the Job Data announced in US, which lost 54,000 nonfarm jobs in August. The decline was smaller than the expectation of 105,000. The rally was particularly led by METAL (STEEL), TEXTILE, AUTO, AUTO ANCILLARY, BANKING & FINANCE and REALTY & INFRA sectors. For whole of the trading day, NIFTY had purely an upside run with almost a gain of 110 points. Finally, for the day it closed at 5576.95, making it almost 31-Months High.

A bit of profit booking with a muted session may be witnessed tomorrow, as a good set of Economic Data are going to be announced in Japan (Interest Rate Decision, Leading Economic Index and Trade Balance) and in Germany (Factory Orders). 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) 5411.13 and the 20-Days EMA (Exponential Moving Average) of 5466.85. 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 5590 / 5620 / 5635 levels. At the same time, 5560 / 5540 / 5525 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 63.82 and 55.48, respectively.
2. MACD (26 Days & 12 Days): Their Values are 23.96 and 21.85, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 30.43, -DI: 18.36, ADX: 17.61: 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 5411.13 and 5466.85.

Stocks in Focus:

PANTALOONR    Buy at the levels of 486-486.50 for the Targets of 495 & 497, with the strict Stop Loss of 480.

JPASSOCIAT       Buy only if it trades above 117.50 for the Targets of 119.80 & 121, with the strict Stop Loss of 116.

RAYMOND      Buy only if it trades above 393 for the Targets of 405 & 410, with the strict Stop Loss of 386.