May 16,2007

NIFTY OUTLOOK (Based on TECHNICAL ANALYSIS)
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NIFTY CLOSE 4120.30. SENSEX close13929.33.

As mentioned in yesterday's post NIFTY has tested 4150. But only if NIFTY closes above 4150 levels in short term the bullish momentum would continue. NIFTY keeps on signalling indecisiveness most often. Markets stays in a range bound bands due to lack of any fresh triggers. It is surprising to see it correcting meagre, when the world markets had a great correction. It may be due to the limited upside encountered in the recent past, when compared to the new highs made by other markets.

The next triggers might be based on the reaction of the indices of other markets or the movement of Rupee-dollar. If the dollar depriciates below Rs.40, it might trigger a sell off in IT stocks. If the dollar appreciates by a rupee or two, then it might make FIIs to pull money out of our market.

Either upward movement or downward movement, which could take place in short term, would be very steep. Contracting bands signals a steep raise or fall in short term.

Another intraday high above 4150 (short to medium term) is likely. Similarly a likely low below 3982 is inevitable too. Although, the timeframe to test it might be unpredictable.

When there is a deep correction, an intraday low below 3575 is likely (medium term to long term). NIFTY is likely to test a low below 3800 in the medium term.
It does mean that it is the time to book profits.

If there is an upward momentum, book profits systemmatically, whenever the stock price is fully valued. Long term investors should utilise this opportunity.

Immediate support level for NIFTY stays at 4050.80. No immediate resistance.

UPPER BAND-> 4210.40

LOWER BAND-> 3950.14

Note: These views do not have any relevance to NIFTY futures.

STOCKS TO WATCH
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[NO STOCKS]-> As profit booking is recommended for the past few days, short to medium term stock recommendations are not made in this column.