Jan 21,2008
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NIFTY OUTLOOK - TECHNICAL ANALYSIS
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NIFTY Closes at 5705.3. SENSEX Closes at 19,013.70.

NIFTY has finally closed below lower band. Although, this is the crucial point, buying should be done at every dip from these levels, as we've got a confirmation for 6345 levels being tested again.

Negative signals - NIFTY consistently closed below medium term sma for three days.

NIFTY is likely to test Friday's low. It is inevitable but the time taken for it to test that levels is unpredictable.

It is to be watched today, to exactly know, whether it would bounce back or plunge into a corrective mode.

NIFTY is likely to test 6345 levels within March. So, the plunge we're witnessing is a short term bias.

Next support level stays at 5587.31. Next resistance level stays at 5935.55.

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

IT sector may be a surprise participant in the next leg of rally.

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 -> 6433.78.

Lower band -> 5726.32.


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