Business Daily from THE HINDU group of publications
Sunday, Jul 22, 2007
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Business Daily from THE HINDU group of publications Sunday, Jul 22, 2007 ePaper |
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Stock Markets Investment World - Technical Analysis Markets - Outlook
Sensex (15565.5)
Since the big boys of IT dampened the morale of the markets with their rupee-scarred earnings, it was left to Reliance Industries to lead the charge last week. The stock did it effortlessly, thanks to the timely gas discovery in Cauvery Basin that helped to take the Sensex safely past the 15500 mark. The feverish fervour witnessed in the run-up to 15K was thankfully missing last week. Jump in Nifty put options and high put-call ratio in the Nifty also point towards increase in hedging positions as market participants turn watchful. Sensex raced past our first short-term target to record an intra-week peak at 15683. Though the momentum indicators in the daily charts are showing traces of tiredness and the weekly momentum indicators are in overbought region, there are no direct sell signals yet. It would be best to stay on the right side of the trend, which is long, until the near term supports are breached. The near-term trend-deciding level in the Sensex is 15350. Projection of the move from the June lows gives us the medium term targets at 15388, 15734 and then 16293. The Sensex has moved beyond the first target and is nudging the second. The positive outlook for the medium term will stay in place as long as the Sensex trades above 14574. The Sensex could head upwards to 15734, 15849 or 16018 next week. The supports for the week would be at 15361 and then 15160. Fresh purchases should be avoided if the Sensex closes below 15350. The markets are clearly getting overstretched. It is no secret that over-extended markets correct in a vicious fashion. Though going short is not recommended, do watch your step in the week ahead. And please reduce your leveraged positions. Nifty (4566)
Nifty moved past our first target to record an intra-week high at 4600.8. The medium term targets for the Nifty now fall at 4628 and then 4803. There is a strong resistance band between 4628 and 4650 for the Nifty. Watch your longs until the Nifty is safely above this band. For the week ahead, the targets are 4628, 4658 and then 4703. Reversal below 4650 would mean that fresh longs for trading should be avoided. The short-term trend deciding level is 4476. Medium term outlook will stay positive until the index stays above 4288. Global Cues
It was not a smooth sailing for the global equities last week. Big brother, Dow Jones Industrial Average underwent a bout of volatility after flirting with the 14000 mark. A close below 13800 would signal the onset of a short-term down trend in this index. European indices such as FTSE, DAX and CAC are moving sideways since June. Asian indices with the sole exception of the Shanghai Composite continued to display strength. Gold revved up last week to move past $675 mark on the Comex. The next target is $693. But, if the current up-move is the third part of the move that commenced in October 2006, another record high will be on the cards in 2007. The situation is identical in copper. A move past $380 in Comex copper will take it towards the former peak of $404.
— Lokeshwarri S. K.
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