Nifty Outlook for 21st October 2010

Yesterday, on the Daily Charts NIFTY made a Short Black Candlestick, representing the presence of weakness in the markets. The downtrend in the markets continued since last five trading sessions. For whole of the trading session, NIFTY traded sluggishly in the range of almost 20 points, between 6000 and 6027. BANKING & FINANCE and SUGAR were the Star Performers of the day. NIFTY tested the support levels of 6000 thrice in the session and finally breached it in the last trading hour by making a low of 5966.75 for the day. For the day, NIFTY made a high of 6038.10 and finally closed at 5982.10 (lower closing in a three day streak).

Purely Stock Specific and Sector Specific actions will be witnessed now as the Results Season has begun. ACC, ALBK, APIL, AMBUJACEM, CORPBANK, STRTECH, TCS, TVSMOTOR & WIPRO will be announcing their results today.

A good set of economic data are going to be announced all over the globe tomorrow. Consumer Price Index, Industrial Production, Retail Sales and Urban Investment for the month of September, also Q3 Gross Domestic Product will be announced in China, All Industry Activity Index for the month of August will be announced in Japan, Purchasing Manager Index for Services and Manufacturing for the month of October will be announced in Germany and European Monetary Union. Consumer Confidence for the month of October will also be announced by European Monetary Union. Retail sales for the month of September will be announced in UK. Initial Jobless Claims and Continuing Jobless Claims will also be announced in US.  

NIFTY opened below its 20-Days EMA (Exponential Moving Average) of 6040.10 at 6002.95, proving the underlying weakness in the markets. The next support levels lie at 5930/5820 and at 50-Days SMA (Simple Moving Average) of 5791.46.

20-Days EMA (Exponential Moving Average) has maintained above the 50-Days SMA (Simple Moving Average), still 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 6020 / 6050 / 6085 levels. At the same time, 5985 / 5860 / 5935 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 48.99 and 59.95, respectively.
2. MACD (26 Days & 12 Days): Their Values are 72.06 and 113.52, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 25.80, -DI: 23.29, ADX: 38.36: 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 5791.46 and 6040.10.

Pre - Market Calls:

ASHOKLEY          Buy only if it trades above 76 for the Targets of 77.50 & 78, with the strict Stop Loss of 75.40.

BHARATFORG     Buy only if it trades above 380 for the Targets of 388 & 390, with the strict Stop Loss of 374.

BAJAJ-AUTO      Sell only if it trades below 1470 for the Targets of 1450 & 1440, with the strict Stop Loss of 1490.