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Market Outlook by 3 wise men
Tuesday, May 8, 2007
Ashwani Gujral,Technical Analyst
Nifty is moving in a range of 4040-4240. Most large caps are likely to fall into some kind of range, whereas the midcaps are likely to outperform. Buying in large caps should be done on dips and its likely a dip to 4040 will come soon.
Market Outlook for
The Nifty is moving in a range of 4040-4240. The month of May is often associated with volatility. Most large caps are likely to fall into some kind of range, whereas the midcaps are likely to outperform. Buying in large caps should be done on dips and its likely a dip to 4040 will come soon.
On the midcaps, tech, media, shipping seem to be showing sector tailwind. Post May, more upside may be found on midcaps. We like GBN, Tech Mahindra, Shipping Corp.
Hitendra Vasudeo,stockmechanics.com
Book profits at 14189-14384-14724 as the opportunity arises. Hold long positions in frontline stocks with a stop loss of 13600. Re-enter long on close above 14724.
Struggle at higher levels By Hitendra Vasudeo In last week�s review, we had expected a minor retracement. Last week, the Sensex opened with a downward gap and attained a low of 13693 against the minimum retracement of 13635. The Sensex last week opened at 13823.40 attained a low at 13693.59 and moved up to a weekly high of 14189.21. The Sensex finally closed the week at 13934.27 and thereby recorded a net rise of 26 points on week-to-week basis. Overall, last week�s movement was flat.
The weekly trend is still up. The weekly trend is up since the weekly closing at 13285 on
Now the Sensex must not fall below 13635 if we have to maintain hopes of its top being attained in the current rally. It would not be an easy task crossing the resistance levels. The Sensex must cross and close above the top of 14724. If that happens, then expect a strong rally to higher levels of 16215. A struggle for the Sensex would continue at higher levels till it does not cross and close above 14724. A fall and close below 13600 would take the Sensex down into a corrective phase once again and into an overall sideways movement in a wider band.
Strategy for the week Book profits at 14189-14384-14724 as the opportunity arise. Hold long positions in frontline stocks with a stop loss of 13600. Re-enter long on close above 14724. Traders can make use of Sensex levels and trade in Nifty.
Review of Sectoral Indices Bullish sectors- BSE CAP/BSE METAL/BSE PSU indices BSE MID CAP BSE MID CAP index has resistance at higher level of 6008-6230. Expect the BSE MID CAP and mid cap stocks in action on sustained rise above 6230. Important support at 5690 and till the index is above 5690, we can expect resistance to be tested and crossed.
BSE SMALL CAP BSE SMALL CAP index is underperforming and is still way off from the recent high range of 7630-7880. In case of rise and close above 7150, expect SMALL CAP index to test the high of 7872.
BSE TECK BSE TECH important support is at 3660. If BSE TECH index manages to maintain above 3660 and crosses 3795 then expect fairly good movement
BSE PSU BSE PSU sector index made a new high which means a lot of strength has gathered by the stocks from BSE PSU sector index. Important support is at 6330. Till the index is above 6330, expect new high to be made. On sustained rise and close above 6561, expect a target of 7104.
BSE OIL & GAS BSE OIL & GAS sector made a new high as the main indices struggled at higher levels. A further breakout and close above 7400, will mean a new high for the sector. Important support point is 7100-6989. Above 7400, subsequent target can be 7876.
BSE METALS BSE METAL index made a top in May�06. When frontline index made a new high in Jan�07, BSE METAL made a lower top at 9827. A breakout and close above 9827 has been witnessed. Expect BSE METAL to test the top of 11402. Important support at 9600.
BSE IT BSE IT is sideways and till it does not cross and close above 5084 don�t expect any strong up move in IT stocks. The moment it gives a breakout and close above 5084, expect IT flavour to be back in action.
BSE HEALTHCARE Attempts of revival have been seen. But expect pressure at higher levels and we may not have clear one way movement. The overall movement could be choppy and sideways overall apart from a couple stocks, which are outperforming this sector.
BSE FMCG Expect confirmation of medium term reversal on weekly rise and close above 1862. If that happens, then expect lower top of 2108 to be tested. Important support is at 1774.
BSE CONSUMER DURABLES Expect upward movement in consumer durable stocks on rise and close above 3881. The index has to maintain above 3637.
BSE CAPITAL GOODS BSE Capital Goods is an evergreen sector. The sector made a new high last week. Important support is at 9673 and expect continuation of upmove on close above 10150.
BSE BANKEX A weak sector index at this point and expect strength above 7280. Use spurts on broad general view to exit pending stuck-up long positions. Support will be at 6899.
BSE AUTO The fall has been deep. Therefore, the rise is more of a pull-back rise. Important support will be at 5005-4900.
BSE DOLLEX BSE DOLLEX made a new high on the back of stronger rupee against the dollar. Expect BSE DOLLEX to move towards 730 at least and to an outer extent to 847.
Conclusion Interesting indices for bullish upmove: BSE CAPITAL GOODS, BSE OIL & GAS, BSE METAL and BSE PSU.
Rajat K Bose, rajatkbose.com
Do daytrading or at the most swing trading, but betting on a trend-following stance for the medium to long term is fraught with real danger of facing a large drawdown in the event of any large counter-trend volatile price movement.
While our markets closed week on last Friday after a heady rise for two consecutive sessions world markets have mostly closed quite strongly. Chances are we would also turn positive today. There is too much money sloshing around the world monetary system these days courtesy the central banks of the world. In most parts of the world money supply growth continues unabated and that is fuelling asset price escalation.
Given the flood of liquidity everywhere else the tightening measures of a sole country do not go very far. Unless it is one of the major economies, sooner or later it will start toeing the line of other economies as well and the scenario of liquidity glut continues unabated.
With so much of liquidity around asset prices do not record any big decline other than short corrections. Hence, unless there is a reversal of this liquidity glut or there is some major event triggering a crisis of confidence any substantial correction may not happen.
The short-term trend of the market remains positive. Medium term trend is stable yet volatile and the long-term trend is trending yet volatile. Given such a scenario, there could be spike like price movements resulting in sharp swing up followed by sharp swing down and again market moving up.
While such a thing is highly favorable for aggressive swing traders it is not a very good environment for trend-following traders since the stop-loss tends to be very large and any trade that gets stopped may take away large sums of money resulting in a substantial erosion of capital.
Thus, do daytrading or at the most swing trading but betting on a trend-following stance for the medium to long term is fraught with real danger of facing a large drawdown in the event of any large counter-trend volatile price movement. Swing trading, in essence, is quite similar to a trend-following stance except that it is only a position for short or very short term.
Thus, given the current state of the market and as we have characterized it above, it is better to daytrade or try and capitalize on short-term swings.
