Oct 12,2007
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NIFTY OUTLOOK - TECHNICAL ANALYSIS
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NIFTY Closes at 5524.85. Sensex Closes at 18814.07.

Book profits... Book profits..... Book profits..... Book profits....Book profits...

NIFTY has reached alarming highs. It is 31% above 200 day sma. If people don't book profits here, they won't find any cash in their hand to buy in dips.

Sensex has almost tested the top for the FY 08, based on fundamental analysis. Further gains in Sensex implies a shift in valuation. Longterm investors should book profits, wherever they find their stocks fully valued. Indian economy is not looking so rosy and its growth momentum likely to slow down, based on various parameters.

NIFTY is in dangerous zone. It is in super risk zone. It is the time to start booking profits, irrespective of upward momentum. Higher volatality might bring a sudden fall, if there is any negative trigger. Time to trade cautious. Avoid fresh longs.

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

Support is at 5408.

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 and other export based industries, which have a major contribution in Indian Growth story might not have encouraging growth and end up in economy slowdown. If IT industry gets affected, spending could comedown 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 -> 5572.

Lower band -> 4312.


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

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