Nifty Outlook for 26th October 2010

Yesterday, NIFTY made a Doji Candlestick, signifying the presence of uncertainty in the markets. NIFTY traded very sluggishly for whole of the trading session. After opening with the positive bias of almost 25-30 points, NIFTY gained almost 75 points for the day and made a high of 6180.00 for the day, with CEMENT, BANKING, REALTY & INFRA, TEXTILE, SUGAR & SHIPPING Sectors trading in the northwards direction. Sectors like METALS and IT witnessed a very volatile session, due to which NIFTY also traded volatile in the mid of the trading session and made a low of 6111 for the day. Currently, the level of 5950 is acting as a very important support level for NIFTY. For the day, NIFTY closed at 6136.75.

A positive movement can be witnessed in the companies having Insurance Arms like TATA, BAJAJHLDNG, LICHSGFIN, GICHSGFIN, CANFINHOME, ICICBANK as SEBI has okayed the disclosure norms for Insurance Companies IPOs. Purely Stock Specific and Sector Specific actions will be witnessed now as the Results Season has begun. CENTRALBK, DEEPAKFERT, DENABANK, DISHTV, HCL-INFOSYS, JINDALSTEL, JSWSTEEL, NTPC, PATNI, RAYMOND, SRF, STER, TECHM, TV-18, ULTRACEMCO, UNIPHOS & VOLTAS will be announcing their results today.

Q3 GDP Data and Index of Services for the month of August will be announced in UK. S&P/Case-Shiller Home Prices Indices for the month of August, Consumer Confidence for the month of October and Housing Price Index for the month of August will be announced in US. Traders are suggested to follow very cautious approach by following Strict Stop Losses in Intraday Trading.

NIFTY traded above its 20-Days EMA (Exponential Moving Average) of 6078.64 for whole of the trading session, even the 20-Days EMA has maintained above the 50-Days SMA (Simple Moving Average), still supporting the recent positive move. The next support levels lie at 5930/5820.

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 6120 / 6160 / 6195 levels. At the same time, 6080 / 6060 / 6030 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 56.78 and 58.03, respectively.
2. MACD (26 Days & 12 Days): Their Values are 60.58 and 90.69, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 28.93, -DI: 18.32, ADX: 34.39: 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 5831.14 and 6053.38.

Pre - Market Calls:

M&M                  Buy only if it trades above 720 for the Targets of 735 & 740, with the strict Stop Loss of 710.

CENTURYTEX      Buy only if it trades above 520 for the Targets of 530 & 532, with the strict Stop Loss of 510.

GESHIP                Buy at the level of 335 for the Targets of 342 & 345, with the strict Stop Loss of 330.