Nifty Outlook for 20th September 2010

On Friday, NIFTY made a White Opening Marubozu Candlestick, on the Daily Charts. For the day, NIFTY made a Gap up opening of about 30-50 points and kept up the good run with METAL, TELECOM, CEMENT, PHARMA and SUGAR Stocks supporting the move. For whole of the trading session, a good northwards movement was witnessed. Many other Big Boys which were muted in this great upside movement from 5350 to 5901 also moved up like RELIANCE, ABB, LT, RPOWER, RCOM and RNRL. For the day, NIFTY made a low of 5479.55 and finally closed strongly at 5884.95.

A bit of selling pressure may be witnessed tomorrow with a bit of profit booking in some sectors as worries re-emerged about the state of the Irish economy in Europe. The cost of insuring Irish debt soared to a record high. Again a good trading momentum can be witnessed in the sectors like CEMENT and METAL. 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) 5488.37 and the 20-Days EMA (Exponential Moving Average) of 5634.31. 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 5895 / 5920 / 5945 levels. At the same time, 5865 / 5845 / 5825 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 77.76 and 72.01, respectively.
2. MACD (26 Days & 12 Days): Their Values are 106.68 and 62.89, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 40.54, -DI: 9.43, ADX: 32.31: 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 5488.37 and 5634.31.

Pre - Market Calls:

RCOM                 Buy only if it trades above 167.30 for the Targets of 172 & 173, with the strict Stop Loss of 165.

ABIRLANUVO    Buy only if it trades above 885 for the Targets of 900 & 903, with the strict Stop Loss of 873.