PYT Market Outlook

Ashwani Gujral, Technical Analyst

The Nifty closed at 3852 for the week ended 18th Nov 2006, up about .47% from the previous week. The market is The market rallied sharply in the first 3 days of last week and consolidated sideways on the last two days of the week. The bulls have time and again shown that they can turn the market around in matter of hours. The market closed the week at 3950.

We believe that the consolidation process is more or less complete and in the next week the market would try to scale upto 4005, 4100. The market is likely to find strong support at 3900, 3934.

Midcap space is participating much more than before. Interest is increasing but is not at frenzied levels, which is what precedes intermediate tops. So the guesstimate on a market top has to be more subjective than objective. When signs euphoria are seen, when public interest becomes very high, that is the time for a top, that time does not seem to have reached. Our medium term target on Nifty are 4700 and on Sensex are 15,500-16,000.

The outperforming sectors remain capital goods, construction reality, banking, telecom, media. Underperformers continue to be FMCG, Metals, Sugar and Autos.


Rajat K Bose,

Now that we are already above 13700, we have come very close to some major resistance zone. This is between 13724 and 13760. We still need to monitor 13760 for the Sensex and 3976-80 for the Nifty. If these two levels are decisively breached and we get two closes above that (this would also mean that we close above these levels on a weekly basis as well) then the bullishness is likely to continue. Else, there could be good amount of selling led initially by profit taking and/or aggressive short-sellers. We must keep in mind that the open positions in the F&O are above Rs 57000 crores.

While the cautionary tale needs to be kept in mind being trend followers we still would advocate buying with proper risk control meaning implementing lower position sizes and strict stop-losses. Advance stop losses as the counters move upwards. Do not attempt rebuilding a long position where you have already booked profits but the counter is still moving up. It pays to be a bit cautious here.

Utpal Choudhury, IDBI Capital

The markets continue moving up despite a lot of skepticism around. The skepticism resulting into lot of short positions in the Futures, is what has been supporting the markets from a correction. That is backed by buying in the cash. The risk arises when long positions accumulate in the future side. Our new hedging level stands at 3830 of Nifty. December series looks fine as yet. However, we are not comfortable with the November futures and wait till the expiry.