Nifty Outlook for 22nd September 2010

After weeks of relentless rally, NIFTY took a leap and recaptured the magical 6000 for the first time since January 15, 2008. NIFTY started the day with the northbound bias and made a high of 6032.80 for the day. Big Boys like RANBAXY, LT, CIPLA, SUNPHARMA, TATAMOTORS, KOTAKBANK, participated very well in the rally and maintained their up move. Highest turnover of Rs. 8768.95 Crore in the Cash Segment was witnessed. For whole of the trading session, NIFTY traded very range bound of about 15-20 points and made a low of 5961.85. IT Stocks kept up their northward direction and helped NIFTY to bounce back from day’s low and made its closing above 6000 at 6009.05.   

A good sector wise momentum may be witnessed. A muted session may be witnessed as in EMU (European Monetary Union) is going to announce its July’s Industrial New Orders (which may play an important role in tomorrow’s move of European Markets). 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) 5500.93 and the 20-Days EMA (Exponential Moving Average) of 5667.28. As long as NIFTY is trading above 5880 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 6025 / 6040 / 6070 levels. At the same time, 5978 / 5950 / 5935 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 82.07 and 75.49, respectively.
2. MACD (26 Days & 12 Days): Their Values are 132.69 and 84.82, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 46.63, -DI: 7.81, ADX: 37.51: The Positive Directional Index has gained strength over the Negative Directional Index and also the Average Directional Index is above 20, indicating the development of strength in the current trend.
4. SMA (50 Days) & EMA (20 Days): The values of these two indicators are 5513.45 and 5699.83.

Pre - Market Calls:

ROLTA                 Buy only if it trades above 177 for the Targets of 180 & 181, with the strict Stop Loss of 174.

MPHASIS            Buy at the level of 662 for the Targets of 672 & 675, with the strict Stop Loss of 653.