Stock Market and Nifty Outlook for 30th August, 2010

Indian Stock Market and Nifty Outlook and Review for 30th August, 2010

On Friday, NIFTY made a Long Black Candlestick on the Daily Charts. Markets witnessed a good selling pressure on the last day of the week, as Cabinet approved the Direct Tax Code Bill in which the Corporate Tax Rate has been reduced to 30% from the current rate of 33.6% and also MAT of 20% has been levied, which disappointed the markets too. Till the second half of the trading session, a good run up was witnessed in the markets particularly led by STEEL Stocks, due to which NIFTY made a high of 5495.20 for the day. But after the opening of the European Markets, a good selling pressure was witnessed, led by BANKING & FINANCE, REALTY & INFRA and TEXTILES. For the day, NIFTY made a low of 5391.95 Hence, it can be said that a choppy session, with which NIFTY ended at 5408.70 for the day.

A bit of flattish session with a positive bias is expected tomorrow, as US Q2 GDP Data was much better than the market expectations and also UK will be witnessing a Trading Holiday on account of Summer Bank Holiday. A good trading momentum will also be witnessed in OMCs Stocks like, HINDPETRO, IOC, BPCL, GAIL, PETRONET and MRPL, as for the first time after the deregulation of the petrol prices, the companies raised the petrol prices by up to Rs. 0.70/liter. 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 Selling of Rs. 108.16 Crore in Cash Segment and of Rs. 2483.63 Crore in F&O Segment by FIIs was witnessed on Friday’s Trading Session.

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 like consumer confidence, spending and sentiment; payrolls and unemployment; and monthly auto sales are going to be announced. In Europe, European Central Bank is going to unveil latest interest-rate decision.

5350 is the major Support which has to be breached to prove the weakness, and unless the NIFTY is trading above this level, the Markets are positive. 20-Days EMA (Exponential Moving Average) has crossed the 50-Days SMA (Simple Moving Average), supporting the recent positive move. MACD (Moving Average Directional Index) and RSI (Relative Strength Index) have turned positive. 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 5425 / 5440 / 5462 levels. At the same time, 5382 / 5365 / 5350 will act as major intraday support levels.

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