Stock Market and Nifty Outlook and Review for 6th September, 2010

Indian Stock Market and Nifty Outlook and Review for 6th September, 2010

On Friday, NIFTY made a Short Black Candlestick on the Daily Chart, as expected a bit of profit booking was witnessed in the markets. NIFTY had a gap up opening as expected, due to strong global cues with almost 30-40 points upside and made a high of 5510.40 for the day. For whole of the day, it traded in the positive territory, and could not even breach the intraday support of 5470, a purely stock and sector specific movements were witnessed again. For the day, NIFTY tested a low of 5471.85 and finally for the day ended at 5479.40. Sectors like FERTILIZER, SUGAR, ENTERTAINMENT & MEDIA, PHARMA and BANKING & FINANCIAL had a good run up.

A gap up opening is expected in the markets for tomorrow, which may convert into a muted session for the rest of the day. U.S. lost 54,000 nonfarm jobs in August. The decline was smaller than the expectation of 105,000. US will be witnessing holiday for Monday on account of Labor Day. Only Stock and Sector specific momentum will be observed as markets are trading range bound. Traders are suggested to follow very cautious approach by following Strict Stop Losses in Intraday Trading.

Net Buying of Rs. 283.02 Crore in Cash Segment and of Rs. 591.23 Crore in F&O Segment by FIIs was witnessed on Friday’s Trading Session.

NIFTY is now trading above its 50-Days SMA (Simple Moving Average) 5406.26 and the 20-Days EMA (Exponential Moving Average) of 5455.26. As long as NIFTY is trading above 5350 levels, traders and investors are suggested to avoid positional shorts.

All the major International Indices after facing resistance are now trading near their important support levels, now from these levels a good bounce can be expected, or if the support breaches, a correction can be expected in the near term. For the next week, a good trading momentum will be observed in Sector Specific and other specific stocks, but then too traders should follow a cautious approach by following strict Stop Losses.

On the Global front, in US, the economic reports take center stage with consumer credit figures, U.S. trade balance, jobless claims and wholesale inventories. Consumer, trade numbers could be disappointing. In Europe, German economic data, Bank of England interest-rate decision are about to be declared. In Asia, The Bank of Japan is set to take center stage in the coming week as it looks at revised GDP and machinery orders in order to determine how to address the rising yen and India too is going to announce the Index of Industrial Production (IIP) for the month of September.

The 20-Days EMA (Exponential Moving Average) has maintained above the 50-Days SMA (Simple Moving Average), supporting the recent positive move. MACD (Moving Average Directional Index) and RSI (Relative Strength Index) have also maintained the positive trend. Traders may take delivery basis position in the stocks turning from their oversold territory and make smart gains.

For the day, intraday resistance for NIFTY comes at 5490 / 5515 / 5540 levels. At the same time, 5470 / 5445 / 5420 will act as major intraday support levels.

Contributed By: Sonal Natani MS(Finance), ICFAI, Hyderabad.