Nifty Outlook for 27th September 2010

On Friday, NIFTY made a Short White Candlestick, on the Daily Charts, showing the strength in the market. The markets opened subdued with almost 10-15 points downside. Not much momentum in the stocks was witnessed in the opening. Many stocks especially the BANKING & FINANCE stocks bounced back from their day’s lows and spurted to day’s high. SUGAR, PACKAGING, REALTY & INFRA, AUTO, IT and BANKING & FINANCE sectors were the star of the day. A major buying interest was witnessed in the PACKAGING sector. For the day, NIFTY made a low of 5951.20, while a high of 6029.10. A good bounce back was witnessed in the markets which led it to the day’s high of 6029.10, after the announcement of the Ifo business climate index in Europe which rose to 106.8 from 106.7 in September. For the day, NIFTY posted a closing of 6018.30.

A gap up opening is expected on Monday, as US posted a good spurt in New Home Sales Data, which rose from 7.1% to 7.6% on MoM Basis. This is an indication of a revival in the US Economy too. Again a good momentum may be witnessed in the PACKAGING Sector and again 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) 5549.52 and the 20-Days EMA (Exponential Moving Average) of 5775.24. NIFTY is continuously showing good strength, and in the long term may also touch the levels of 6200.

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 6030 / 6050 / 6088 levels. At the same time, 6000 / 5980 / 5945 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 77.62 and 76.37, respectively.
2. MACD (26 Days & 12 Days): Their Values are 143.82 and 115.81, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 38.44, -DI: 8.68, ADX: 42.69: 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 5549.52 and 5775.24.

Pre - Market Calls:

CENTURYTEX      Buy only if it trades above 512 for the Targets of 520 & 525, with the strict Stop Loss of 505.

KPIT                     Buy only if it trades above 175 for the Targets of 178 & 180, with the strict Stop Loss of 172.

HAVELLS             Buy only if it trades above 810 for the Targets of 820 & 828, with the strict Stop Loss of 800.