Nifty Outlook for 23rd September 2010

On the Daily Charts, NIFTY made a Doji Candlestick Pattern, continuously for the second trading session. Both of the Doji Candlesticks are formed at the peak of the market, which give a cautious hint for the markets ahead. NIFTY opened with a positive bias and made a high of 6037.40 for the day. But it couldn’t sustain its northward movement and heavy selling pressure crept in most of the heavyweights and trading stocks. Majority of the big boys (Major IT Stocks) witnessed good selling pressure. MARUTI, SBIN, ICICIBANK, ABB, ITC, HINDUNILVR maintained their uptrend till the end of the session. TECHM (almost 8%) & SATYAMCOMP (almost 15%) were the shining starts of yesterday’s trading session. For the day, NIFTY dipped till the levels of 5946.45 and bounced back in the last trading hour till the levels of 6000 again, posting the closing of 5991.00 for the day.

A bit of selling pressure may be witnessed tomorrow with IT sector in the pressure. Chinese and Japanese markets will be witnessing trading holiday tomorrow, and a good set of economic Data will be announced in Europe (Purchasing Manager Index for Services and Manufacturing in Germany and EMU) and in US (Initial and Continuous Jobless Claims and Existing Home Sales Data), which will decide the further move of the markets. A good sector wise momentum may be witnessed. 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) 5525.26 and the 20-Days EMA (Exponential Moving Average) of 5727.56. 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 79.52 and 76.29, respectively.
2. MACD (26 Days & 12 Days): Their Values are 139.09 and 96.00, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 42.40, -DI: 8.64, ADX: 39.56: 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 5525.26 and 5727.56.

Pre - Market Calls:

PUNJLLOYD        Buy at the level of 127.30 for the Targets of 130 & 131, with the strict Stop Loss of 125.80.

IDBI                     Buy at the level of 147 for the Targets of 150 & 152, with the strict Stop Loss of 145.

DLF                      Sell only if it trades below 350 for the Targets of 343 & 341, with the strict Stop Loss of 356.