Nifty Outlook for 17th September 2010

Yesterday, NIFTY made a Black Candlestick, breaking the streak of last seven trading sessions. NIFTY opened with a dip of almost 20 points, and kept trading range bound with 10-20 points upside and downside till the announcement of Mid Term RBI (Reserve Bank of India) Credit Policy Review at noon. BANKING & FINANCE and REALTY & INFRA witnessed a good dip before the announcement. RBI raised both the Repo Rate and Reverse Repo Rate by 25 Bps (from 4.75% to 5%) and 50 Bps (from 5.5% to 6%), respectively. After this announcement, BANKS and REALTY & INFRA led the rally and drove NIFTY to new high of 5901.65. Also, BANKNIFTY moved to a new life time high. On the other hand, announcement of Q2 Advance Tax Numbers by India Inc. is the other factor initiating Stock Specific movements. After making a new high NIFTY reverted and dragged till the levels of 5815.80. As, expected a pretty good choppy session was witnessed yesterday. Finally for the day, it ended at 5828.70.

A muted trading session may be witnessed tomorrow with a bit of profit booking in some sectors. A good set of economic data are going to be announced in Europe (Germany’s Producer Price Index, EMU’s Current Account and Construction Output) and in US (Consumer Price Index and Consumer Sentiment Index). 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 has moved much above its 50-Days SMA (Simple Moving Average) 5476.61 and the 20-Days EMA (Exponential Moving Average) of 5607.93. As long as NIFTY is trading above 5650 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 Convergence Divergence) has also maintained the positive trend. But at the same time, RSI (Relative Strength Index) reverted from the overbought zone. Traders are suggested to trade cautiously in the markets, as markets have surpassed all the major resistances and have entered in the Over Bought Zone.

For the day, intraday resistance for NIFTY comes at 5840 / 5868 / 5885 levels. At the same time, 5800 / 5780 / 5765 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 75.31and 70.57, respectively.
2. MACD (26 Days & 12 Days): Their Values are 96.88 and 52.81, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 43.77, -DI: 10.18, ADX: 30.01: The Positive Directional Index has gained strength over the Negative Directional Index and also the Average Directional Index is nearing 20, indicating the development of strength in the current trend.
4. SMA (50 Days) & EMA (20 Days): The values of these two indicators are 5476.61 and 5607.93.

Pre - Market Calls:

BHARTIARTL      Sell only if its trades below 345.60 for the Targets of 338 & 335, with the strict Stop Loss of 352.

BHEL                   Sell only if its trades below 2450 for the Targets of 2435 & 2428, with the strict Stop Loss of 2462.

SUZLON              Buy only if it trades above 53.20 for the Target of 55.30, with the strict Stop Loss of 52.