Oct 30,2007
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NIFTY OUTLOOK - TECHNICAL ANALYSIS
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NIFTY Closes at 5905.90. Sensex Closes at 19977.67.

NIFTY tested previous high. We already mentioned in previous posts that the previous high would be tested sure. But yesterday's rally is due to irrational exuberance. Market has to cool before next leg of rally. Otherwise it might become a bubble. NIFTY closes above the upper band. It is not advisable to go long.

It is the time for consolidation or stay indecisive, since the volatality levels are high and the market is in overbought position. It is time for another corrective wave to take place, if the markets move up further. So, profits could be booked systematically, if the markets move up.

Although RBI's policy and Fed's policy likely to have some implications, it must be mentioned that market is moving towards a danger zone again. This time domestic money's contribution to this upmove is very significant. So, stay cautious.

As mentioned in previous post, NIFTY is likely to test a low below 4446 and 4453 in medium to long term.

Support is at 5644.

Rupees appreciation against dollar is a dangerous proposition for Indian Economy in long term. It might prevent and discourage new investments in Export oriented industries, Textiles, IT, Pharma, SMEs supplying raw materials, SEZs, etc., which have a major contribution in Indian Growth story might not have encouraging growth and end up in economic slowdown. If IT industry gets affected, spending could deplete and affect Real Estate firms, Banking, Consumer Durables,etc. Moreover, there is a chance of huge trade deficits and current account deficits, which could encourage FII outflows, which might affect markets.

Upper band -> 5872.

Lower band -> 4918.


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

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