Citigroup - India Weekly Technicals

Citigroup in their Weekly Technical Report advise,

Nifty — The index opened on a positive note towards the opening session of the week. Mid-week it gyrated in a narrow band of 4307-4241. It closed the week on a positive note up 49 points.

Channel — The index from the low of 3617 (2 April 07) is trading in a upwards sloping channel finding support at the lower end and resistance at the upper end of the channel. Channel support for the current week's trading is around 4230.The index maintaning above the lower end of the channel on a closing basis should be considered positive

Momentum oscillators — The momentum oscillators on the daily charts are exhibiting negative divergence (i.e. Index has posted a higher high whereas the oscillators has posted a lower high). RSI (14) – Relative Strength Index, MACD, Stochastic (5, 3) on the daily charts are exhibiting negative divergence .This indicated range-bound trading can be expected during the current week with support around the lower end of the channel around 4230.

Support — The support levels for Nifty during the current week’s trading are around 4263 (10dma) and 4230 (lower end of the channel). Break of support around 4230 will see nifty exhibit intra week volatility and dip down towards 4141 (low of 25 May 2007).

Higher levels — Last week's trading saw index confined in a trading band of 4307 on the upside and 4241 on the downside, a breakout from this trading band (i.e. a close above 4307) can see it move up towards 4373 levels.

Conclusion — Stay focused on upside towards 4373 while prices hold above 4230 (on a closing basis).