OUTLOOK FOR THE DAY.................

It was a historic session for the markets as Nifty crossed the 5400 mark with momentum. The benchmark index closed near the high point of the day at the 5419 level after making a high of 5421. This represents that the market is discounting any negative developments as was the case for today’s session. Infosys, the second largest IT services exporter came out with a decline of 7.98% percent in profit and “lower than expectation” increase in revenue at 4.27% QOQ. This led to a selloff in the counter as well as the CNX IT index closed with a 2.55% shed, the only sectorial index closing with a loss.

The market looked directionless for the first half of the session. It was accompanied with large intraday swings with the Nifty even testing the 5360 levels. As iterated in our newsletter, the 5355 level acted as a strong support to the index and rebound from those levels. This was accompanied with a strong momentum on the buy side which drifted the index to above 5400 levels.

The technicals as suggested in our newsletters provided a buy signal for the Nifty. Our view proved to be correct as the short term moving average (20EMA) trading above the medium term moving average (50EMA). We expect Nifty to find a strong support in case of a correction at these averages.

The ADX indicator is getting stronger after every subsequent trading session. The current value of the indicator at 37.46 levels is suggesting the presence of strong trend in the indices. This trend would continue till the indicator tops out which would be a signal to book some profits. The +DI and –DI are continuing on their diversion path, which indicates towards presence of buyer at every lower level.

The MACD trend indicator is suggesting a bullish story for the Nifty with the MACD line trading above the Signal line. The MACD Histogram indicator is also making higher peaks for the session. The current surge would continue till the indicator tops out. It would be a signal to book some profits for the long positions in the benchmark.

The Slow Stochastic momentum indicator is also trading towards the above 80 levels. The subsequent move above the 80 levels could be expected by this indicator, pointing towards a strong buying momentum. The advance is going to continue till the indicators continue their journey. We expect Nifty to trade in the range of 5435-5365.

TEAM SLT