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Market Outlook

Thursday, June 21, 2007

Ambareesh Baliga, Analyst, Karvy Stock Broking, said, “I don’t see much of an upside from here on. In the past couple of months, we have seen that whenever it comes to these levels, it comes down. It is finding it difficult to cross the 4,250-4,300 levels on the Nifty. This is a level where there is a lot of resistance.”

He feels that there are not too many shorts in the market. “There was liquidity in the markets and surely you had two big IPOs, which couldn’t have afforded to bomb, especially DLF and ICICI Bank. The markets held up at these higher levels and there were a lot of shorts that were created in the recent past, which got covered. At this point of time, we don’t have too many shorts in the market. I think that’s one of the other reasons why the markets can’t move from here, because the shorts are not there to be covered any more,” he added.

On whether the Sensex will touch a new high in the run-up to this derivative settlement next Thursday, Baliga said, “It could be sticky. You could see the markets fall about 150-200 points from here and then bounce back towards that Thursday. But crossing the earlier high will be very difficult.”

He said the Sensex could touch 13,000-13,200 levels. “We see downside of possibly around 13,000-13,200 levels on the Sensex. Below that, it seems a bit difficult again, because there is liquidity in the market. But again, the liquidity is there at a particular price. This liquidity, which is not possibly coming in at 14,500 levels, can actually come in at 13,200 levels,” he added.

Baliga feels that investors should not enter the markets at this juncture. “Fundamentally, there are not too many compelling reasons for people to buy at this juncture. If you buy at these levels, you should expect at least a 15-20% return. At this level you really can’t justify the valuations. I feel one should possibly hold on till next Thursday, beyond which it will be a bit difficult for the markets to hold on. Once we enter the earnings season, we could see the markets come down because a slowdown would be confirmed by then,” he added.

Anil Manghnani, Analyst, Modern Shares & Stock Brokers, said, “We have at least moved away from the US market scenario, we just don’t follow it blindly the next morning. That is a good sign. Even though we have crucial levels of 4,240 and 14,400, there is another level that I am watching out for, those are 14,508 on the Sensex and about 4,272 on the Nifty. These are all targets and it is difficult to say whether we touch new highs. If 14,508 and 4,272 are taken off, then you are looking at newer highs.”

He would like to see the markets trading, at these levels, for a couple of days, to see whether it has tired out. “The market is looking a little tired but it’s only a day. I would like to see, for a couple of days, how the market trades at these levels. If it again shows a similar move, say tomorrow or Monday, then you could safely assume that the market is tired out. It would probably need to go down first, and reconsolidate, before we start off towards the all-time highs,” he added.

Neeraj Deewan, Director at Quantum Securities, said, “People are waiting with cash to buy at lower levels; so buying has come in at that level, plus a bit of short covering is being triggered now. I feel that the markets should remain stable. If the Sensex breaks its all-time highs and stays there for sometime, we can add some more positions at that level. If the market fails again, then investors should book some profits”.

He feels the markets should breach their highs this time round. “The market should be able to breach their highs this time, but it is getting a bit difficult for the market to sustain those levels. Even after breaking those highs, it might not be able to sustain those levels. There should be some volatility and profit-taking when the earnings season starts, and the market would be quite choppy at that time,” Deewan added.

Posted by FR at 8:40 PM  


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