Nifty Outlook for 05th October 2010

Yesterday, on the Daily Charts, NIFTY made a Shooting Star Pattern, which signifies that the market opened near its low, then prices strongly rallied up and finally prices moved down to close near the opening price. In other words, the rally of the day was not sustained. Formation of this candlestick pattern, signals to follow a cautious approach for the next trading session. Keeping up the northwards movement, NIFTY again made new 52-weeks high of 6222.10. The session started with a gap up opening of almost 20-25 points and with most of the Big Boys in green (especially METALS). Small BANKING & FINANCE Stocks also kept up their northwards movement for whole of the trading session. After touching the day’s high, NIFTY reverted and made a low of 6143.40, with the stocks witnessing a good selloff. For the day, NIFTY ended the session at 6159.45.

A bit of selling pressure may be witnessed tomorrow. Chinese Markets will be closed till 07^th October, 2010 on the Occasion of National Day. A good set of Economic data will be announced in the Global Markets like; Bank of Japan will be giving its decision on Interest Rate, in Germany and European Monetary Union (EMU) the announcement of Purchasing Manager Index. Apart from this, Retail Sales Data in EMU will also be announced. 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) 5628.53 and the 20-Days EMA (Exponential Moving Average) of 5909.92. NIFTY is continuously showing good strength, and in the long term may also cross its previous life time high of 6375.

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 6180 / 6200 / 6230 levels. At the same time, 6145 / 6120 / 6095 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 79.35 and 76.77, respectively.
2. MACD (26 Days & 12 Days): Their Values are 149.35 and 143.55, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 43.33, -DI: 8.43, ADX: 49.34: 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 5628.53 and 5909.92.

Pre - Market Calls:

RELCAPITAL                    Buy only if it trades above 825 for the Targets of 845 & 848, with the strict Stop Loss of 815.

SYNDIBANK                    Buy at the levels of 125 for the Targets of 127 & 128, with the strict Stop Loss of 124.

BHARTIARTL                  Sell only if it trades below 356 for the Targets of 349 & 346, with the strict Stop Loss of 362.