Nifty Outlook for 10th November 2010

Yesterday, NIFTY made a Bearish Hanging Man Candlestick Pattern, which is a bearish reversal pattern. It signals a market top or a resistance level. This pattern signals that selling pressure is starting to increase. The low of the long lower shadow indicates that the sellers pushed prices lower during the session. Even though the bulls regained their footing and drove prices higher by the finish, the appearance of this selling pressure after a rally is a serious warning signal. A very quiet opening was witnessed in the markets with a positive bias of almost 5-7 points. A quiet sluggish session, with a bit of profit booking was witnessed in the markets till the first half which dragged NIFTY till the levels of 6243.55 for the day. Purely Stock and Sector wise movement was witnessed all over the counter, with FERTLIZER Stocks being the star performer of the day. NIFTY bounced back in the second half and made a high of 6310.90. After a sluggish and a volatile session at some counter, NIFTY finally ended the session at 6301.55. Currently, the level of 6180 is acting as a very important support level for NIFTY.

Purely Stock Specific and Sector Specific actions will be witnessed now as the Results Season has begun. BHARTIARTL, BPCL, DLF, GTOFFSHORE, NAGARCONST and PFC will be announcing their results today.

Trade Balance, with the exports and imports numbers for the month of October will be announced in China, Japan will be announcing its Consumer Confidence data, Domestic Corporate Goods Price Index for the month of October and Core Machinery Orders for the month of September. BoE (Bank of England) will be coming out with the Quarterly Inflation Report in UK. US will be coming out with a good set of Economic Data like, Import Price Index for the month of October, Initial Jobless Claims, Continuing Jobless Claims, Trade Balance for the month of September and Monthly Budget Statement for the month of October.

NIFTY is now again trading above its 20-Days EMA (Exponential Moving Average) of 6141.17 and the 50-Days SMA (Simple Moving Average) of 5980.56. Both the moving averages are still supporting the recent positive move. The next support level lies at 5960.

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 6320 / 6350 / 6385 levels. At the same time, 6240 / 6200 / 6180 will act as major intraday support levels.

What does Indicators Say?

1. RSI (14 Days & 9 Days): The values are 65.49 and 61.62, respectively, showing a negative crossover.
2. MACD (26 Days & 12 Days): Their Values are 75.97 and 48.99, respectively. a positive crossover is indicated by both the Moving Averages.
3. +DI: 33.74, -DI: 19.43, ADX: 25.44: 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 5980.56 and 6141.17.

Pre - Market Calls:

BANKINDIA        Buy at the levels of 528-529 for the Targets of 540 & 544, with the strict Stop Loss of 518.

LICHSGFIN          Buy only if it trades above 1405 for the Targets of 1430 & 1440, with the strict Stop Loss of 1390.

HDFCBANK         Buy only if it trades above 2410 for the Targets of 2460 & 2470, with the strict Stop Loss of 2395.