Nifty Outlook for 14th October 2010

Yesterday, on the Daily Charts NIFTY made a Long White Candlestick. A good buying interest was witnessed in the markets. NIFTY had a much muted opening of only 15-20 points with the positive bias. Markets had a good run up with IT, CAPITAL GOODS, AUTO, BANKING & FINANCE, STEEL, REALTY & INFRA Sectors gaining highest for the day almost 4-5% each. NIFTY witnessed a robust gain of almost 150 points in a day. Big Boys like AXISBANK, LICHSGFIN & INFOSYSTCH are going to announce their quarterly results in near time. Recently, NIFTY is facing a strong support of 6000 and it bounced back robustly from the recent low of 6057.95 (low made day before yesterday) yesterday.  NIFTY made a new 52-week high or say 32-months high of 6240.25 yesterday, with the expectation of robust Quarterly earnings to be posted by India Inc. Finally for the day NIFTY closed at 6233.90, the level which was acting as a strong resistance recently.  

Purely Stock Specific and Sector Specific actions will be witnessed now as the Results Season has begun. A good trading momentum can be witnessed in CEMENT and BANKING & FINANCE Sectors tomorrow. A good set of economic data are going to be announced all over the globe tomorrow as well. Total Investment Capital made by Foreign Enterprises, i.e. FDI – Foreign Direct Investment in the year will be announced in China. At the same time, Initial Jobless Claims, Continuing Jobless Claims and Trade Balance for the month of September will be announced in US. 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) 5730.97 and the 20-Days EMA (Exponential Moving Average) of 6029.35. 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 6250 / 6280 / 6300 levels. At the same time, 6200 / 6175 / 6145 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 71.93 and 71.61, respectively.
2. MACD (26 Days & 12 Days): Their Values are 128.19 and 140.90, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 36.58, -DI: 15.20, ADX: 47.55: 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 5730.97 and 6029.35.

Pre - Market Calls:

HCLTECH             Buy at the levels of 445-446 for the Targets of 455 & 460, with the strict Stop Loss of 438.

CENTURYTEX      Buy only if it trades above 530 for the Targets of 540 & 542, with the strict Stop Loss of 520.

SYNDIBANK        Buy at the level of 137 for the Target of 140, with the strict Stop Loss of 135.