Outlook for the Day: 19th July 2010

The major driving force for the market would be the result announcement and guidance by the companies. The results will be acting as a key driver for the stock prices to take direction according to the expectations by streets in today’s session. The scrip prices will be reacting to the performance of the companies and a “below than expected” would be liable for profit booking. The session would be guided by the sector specific announcements by the companies; some of the sectorial behemoths are yet to make the announcement.

The technical picture is showing strength in the market but the scenario could change in case of a major announcement. The charts would be drawn in the favor of the change in technical picture of the benchmark. The 5445 is going to be a strong resistance for the immediate future and the index could be susceptible to some profit booking. The short term moving average (20-EMA) will be acting as a strong support for the benchmark in case of a major downslide. The medium term moving average (50-EMA) is still below the short term counterpart which suggests the current surge to continue until the averages tops out.

The ADX is trading near the 49 levels which would be a trend continuation signal in case the sideways as evident on the charts for the indicator continues for the time being. The current trend would reverse if the ADX tops out, which would be a major signal to book some profits. The +DI & -DI have started their journey towards a possible crossover, in which case the sellers would be at a better hand. The market would be deciding the new direction which the inflection point of these indicators crossover.

The MACD trend indicator is suggesting a sideways trend which could change in case the crossover of the MACD line and Signal lines happens. The crossover between both the lines will be the deciding factor for the next possible move in the Nifty. The MACD Histogram is also making lower tops each trading session which could lead to a sell signal in case the indicator moves towards negative domain.

The Slow Stochastic momentum indicator is coming off its highs and the subsequent move towards the 50 levels could be expected for the indicators. The %D line and the %K line are trading at below 80 levels with a momentum towards taking the profit off the table. The momentum in case of the indicator in the upper 80 line would again bring the buying momentum back to the indices. We expect Nifty to trade in the range of 5415-5350 for today’s session.

TEAM SLT