Oct 23,2007
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NIFTY OUTLOOK - TECHNICAL ANALYSIS
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NIFTY Closes at 5184. Sensex Closes at 17613.99.

NIFTY has closed below medium term sma for the first time in this fall. So, this is a place, where the trend would get set. Either it might bounce back or slide down. Wait and watch today's markets. It is a trend setting day. If the trend is negative, NIFTY could test the lower band in medium term.

NIFTY continues drifting down for the last five trading sessions. Now NIFTY has signalled indecisiveness after the fall. So, it is better to watch the NIFTY setting a new short term trend.

Although SEBI has cleared many apprehensions of FIIs, only the final draft proposals could bring clarity. So, uncertainity still prevails.

Market may stay volatile until a clear trend is set. Don't take any position as of now. Or just use some strategies like straddles.

SEBI's proposals on P-notes,RBI's policy statements, Federal's rate cuts, etc. have to be watched. So, the markets might remain unpredictable till the end of October.

NIFTY would test the previous high (5736.8) sure, in medium term to long term, since it got a technical confirmation for the high to be tested.

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

Support is at 4986.55.

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 -> 5728.

Lower band -> 4728.


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

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