Nifty Outlook for 13th October 2010

Yesterday, on the Daily Charts NIFTY made a Small Black Candlestick, which shows that the Markets witnessed a good selloff. NIFTY had a muted opening with 15-20 points of negative bias. A bit of selling pressure was witnessed till the announcement of August IIP Numbers. August IIP was announced at 5.6% Vs 10.6% (on Month on Month Basis), which were very less than expected by the markets. With the announcement of data, NIFTY faced a good dip of almost 75 points and reached till the level of 6057.95. Sectors like METALS, BANKING, CAPITAL GOODS and REALTY & INFRA witnessed a good selling pressure. After testing a low of 6057.95 NIFTY again bounced back and finally ended the session at 6090.90. Other than all this a much muted session was witnessed at the other counters of the market.

A bit of skittish session may be witnessed tomorrow as NIFTY may test its important support of 6000 very soon. A good set of economic data are going to be announced all over the globe tomorrow. Trade Balance for the month of September is going to be announcing in China, Jobless Claims Change for the month of September and ILO Unemployment Rate for August are going to be announcing in UK. US is also going to announce its Monthly Budget Statement for the month of September. 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) 5715.09 and the 20-Days EMA (Exponential Moving Average) of 6007.82. NIFTY is continuously showing good strength, and in the long term may also cross its previous life time high of 6357. On the flip side, the level of 6000 is acting as a strong support level.

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 6100 / 6130 / 6155 levels. At the same time, 6065 / 6030 / 6000 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 64.12 and 71.52, respectively.
2. MACD (26 Days & 12 Days): Their Values are 125.13 and 142.17, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 32.65, -DI: 17.44, ADX: 48.03: 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 5715.09 and 6007.82.

Pre - Market Calls:

LUPIN                  Buy at the levels of 424-425 for the Targets of 433 & 435, with the strict Stop Loss of 418.

ANDHRABANK   Buy only if it trades above 170 for the Target of 174, with the strict Stop Loss of 168.