June 4,2007

NIFTY OUTLOOK (Based on TECHNICAL ANALYSIS)
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NIFTY CLOSE 4297.05. Sensex Close 14570.70.

NIFTY had a new intraday and new closing high yesterday again. NIFTY has two simultaneous high close settlements. It has to be watched how long the NIFTY consolidates. NIFTY is consolidating and moves up slowly and steadily. NIFTY has signalled indecisiveness again. So a new trend has not been set. Limited volatality augurs well and not posing any threat as of now.

Though chart patterns looks good, it has signalled many possible intraday lows below 4245,4145, 3982, 3800,..... It serves as a note of caution while trading. Any long position should have a strict stop loss. Even the bullishness would just help the market to move by 5% from the current levels, which may not be great.

Liquidity might get sucked out of the markets, after the large public offerings in the recent future - DLF, HDFC Bank and ICICI Bank. It could affect the bull rally to some extent. This is a note of caution for long term investors.

Rupee is overvalued by 15%+ in real(fundamental) terms. So, if there is any depreciation in Rupee, it would reverse the FII inflows. RBI is expected to intervene in the forex markets to stabilise the rupee from appreciating further. Although it may not take place overnight, it provides a clue to stay cautious.

If NIFTY closes below 4178, the strength of the rally might weaken.

NIFTY has an upper target above 4415. But the timeframe for the target to be achieved is unpredictable.

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 4284.25. No immediate resistance.
UPPER BAND-> 4355.76.

LOWER BAND-> 4026.94.

Higher upper band provides some scope for NIFTY on the upperside.

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.