Nifty Weekly Outlook (06th to 10th September 2010)

Last Week ending on Friday (03^rd September 2010) NIFTY gained around 1.31% and closed at 5479.40 as compared to the last week’s closing of 5408.70. Continuing the uptrend and also the rising consolidation pattern, NIFTY made a White Candlestick on the weekly charts. As seen on the charts, NIFTY is forming a bullish consolidation pattern, with higher highs and higher lows, which is a Bullish Consolidation Pattern.  In the starting of the last week, a good selloff was witnessed in the Markets due to negative reaction of the markets to the approval of 20% MAT (Minimum Alternative Tax), which increased from the earlier proposed level of 16%. After the announcement of Indian Q2 GDP Data, which was at 8.8% Vs 8.6% (QoQ), but on tge same day NIFTY breached its important physiological support of 5350 by making a low of 5348.90 (posting it as the Week’s Low also), as US President, Barack Obama urged Congress to quickly pass a jobs bill as "too many" Americans are continuing to look for work and at the same time YEN against appreciated against the DOLLAR, which led a selloff in Asian as well as the European Markets. Starting from Wednesday, NIFTY again continued its uptrend as China's official purchasing managers' index rose to 51.7 in August from 51.2 in July, a reading over 50 indicates an increase in manufacturing activity. The Australian economy grew 1.2% on a seasonally adjusted basis in the three months to end-June. On a trend basis, second-quarter GDP rose 0.9%, bringing annual growth to 3.2% and market expected it’s at 2.8%.  It can be said last week was quite eventful for the financial markets around the globe.

For the week, NIFTY made a high of 5513.95, whereas a low of 5348.90. A purely Sector and Stock Specific play was witnessed in the last week too. TEXTILE, CEMENT, HOTELS, SUGAR, FERTILIZER, ENTERTAINMENT, REALTY & INFRA, BANKING & FINANCE, OMCs & PHARMA Sectors witnessed a good run up in the last week. NIFTY has moved much above its 40-Days EMA (Exponential Moving Average) of 5150.69, but has breached the 20-Days EMA of 5455.26.

All the major International Indices after facing resistance are now trading near their important support levels, now from these levels a good bounce can be expected, or if the support breaches, a correction can be expected in the near term. For the next week, a good trading momentum will be observed in Sector Specific and other specific stocks, but then too traders should follow a cautious approach by following strict Stop Losses.

On the Global front, in US, the economic reports take center stage with consumer credit figures, U.S. trade balance, jobless claims and wholesale inventories. Consumer, trade numbers could be disappointing. In Europe, German economic data, Bank of England interest-rate decision are about to be declared. In Asia, The Bank of Japan is set to take center stage in the coming week as it looks at revised GDP and machinery orders in order to determine how to address the rising yen and India too is going to announce the Index of Industrial Production (IIP) for the month of September.

With the ongoing uncertain global environment and results season, traders are suggested to trade cautiously by following Strict Stop Losses and avoid making fresh investments at this point of time.

For the next week, the level of 5550 / 5595 / 5630 will act as an important resistance, whereas the level of 5350 / 5315 / 5290 will act as an important support for NIFTY.