Nifty Weekly Outlook (20th to 24th September 2010)

Last Week ending on Friday (17^th September 2010) NIFTY astonishingly gained almost 4.34% and closed strongly at 5884.95 as compared to the last week’s closing of 5640.05. NIFTY gave a strong breakout from its Bullish Consolidation Pattern by making a White Opening Marubozu Candlestick on the weekly charts. Since the starting of the week, NIFTY continued its uptrend with a good economic outlook. Indian Inc. posted a good set of Q2 FY 11 Advance Tax Numbers and at the same time RBI (Reserve Bank of India) raised the Reverse Rate and Reverse Repo Rate by 25 Bps and 50 Bps, respectively in its Mid Term Credit Policy Review. This action was theoretically negative for the REALTY & INFRA and AUTO Sector, but the markets avoided its negative impact and continued its uptrend. Last week, NIFTY made a new 52-Week High or say 31-Months High of 5901.65, with BANKNIFTY trading at its life time high. NIFTY maintained its exorbitant up run without any pause, that too with a good sectoral cycle like CEMENT, METALS, REALTY & INFRA, BANKING & FINANCE and SUGAR. For the week NIFTY made a low of 5639.20 and a new 52-Weeks High or say 31-Months High of 5901.65. NIFTY has moved much above its 40-Days EMA (Exponential Moving Average) of 5209.21 and the 20-Days EMA of 5634.31.

A bit of profit booking and southwards movement can be witnessed in the next week, as worries re-emerged about the state of the Irish economy in Europe. The cost of insuring Irish debt soared to a record high. On the other hand, in India the Verdict on 59 years old Ayodhya Issue is going to be declare on 24^th September, Friday, which may rose a communal tension leading to disturbance on the Political front. Hence, traders are suggested to trade cautiously by following Strict Stop Losses and avoid making fresh investments at this point of time.

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.

On the Global front, in US, Data from housing starts to sales are due and Federal Reserves’ Interest Rate Decision is also awaited.

For the next week, the level of 5950 & 5975 will act as an important resistance, whereas the level of 5750 & 5680 will act as an important support for NIFTY.