*Index Outlook — Market bids a quiet adieu to 2010 * **
** ** ** ** ** ** ** ** Sensex (20,073.6) Market participants appeared to be going through the motions last week with thoughts already in far-off hills or beaches where they have planned that hard-earned vacation. The Sensex made some lackadaisical moves around the 20,000 mark and finally closed a per cent higher. It would come as a surprise to many that the Indian stock market used to shut down for a week between Christmas and New Year once. Must say it made a lot of sense! But then market was functional for only two to three hours then. That was the time when our stock market moved at its own pace without the need to sprint with rest of the world. Lack of trading interest was reflected in volumes petering down in both cash as well as derivative segment of the market. FII activity also reduced on the bourses towards weekend. Inflation will continue to bother market players next week with crude topping $90 a barrel and food inflation rising at 12.13 per cent. Expiry of December series and an impending fuel price hike are likely to cause some ripples in an otherwise sedate week. Open interest in the derivative segment is relatively lower around 1, 65,000 crore. This denotes lesser trading interest that augurs well for market in the week ahead. Oscillators in the daily chart continue to trudge sideways. But the weekly oscillators are hovering in the neutral zone implying that the index is at a very critical juncture as far as the medium-term trend is concerned. What is more heartening is the bullish bias in the 10-month rate of change oscillator and 14-mont relative strength index. The guideposts for the medium-term movement in the Sensex are thus, The index faces strong resistance in the band between 20,000 and 20,300. Inability to clear this zone will result in decline to 18,800 or even 18,000 in the beginning of 2011. Strong move above 20,300 will turn the medium-term trend neutral paving the way for a rally towards the life-time high at 21,108. Another wobble is possible near this peak and reversal from here will pull the index down to 19,000 again. Strong move above 21,108 will make the index rally to 23,031 over the medium-term. The medium-term trend will be roiled only on a close below 19,000. The closing on Friday was gung-ho with Christmas cheer spilling in to stock prices. The Sensex could attempt to build on this by rallying to 20,284 or 20,545 in the days ahead. If the index fails to move beyond the first resistance, it will denote an impending decline to 19,827 or 19,740. Short-term investors can buy in declines as long as the first support holds. Subsequent supports are at 19,485 and 19,074. Nifty (6,011.6) The Nifty too was comatose in a narrow range between 5,900 and 6,000 last week. But it ended the week near the high, with 63 points gain. The medium-term trend in the Nifty continues to hang in balance. It has not yet moved above the strong resistance in the zone between 6,030 and 6,100. Strong close above this zone will take the index towards its previous peak at 6,338. Conversely, a reversal from below this zone can drag the Nifty down to 5,840 or even 5,624 in the days ahead. Fresh long positions are therefore recommended only on a strong close above 6,100. Targets on a close above 6,350 remain at 6,680 and 7,270. For the short-term, the index can attempt to move higher to 6,090 or 6,127. Aforementioned resistance in this zone can thwart rallies and drag the index down to 5,932 or 5,908 in the days ahead. Short-term traders can buy in declines as long as the index trades above the second support. Breach of this level can drag the index to 5,870 or 5,840. Global Cues Global markets appear to be on course to end the year on an upbeat note. Most benchmarks closed the week in positive terrain though trading was very thin in most markets. Benchmarks in Canada, Austria, Germany, Russia, and the UK and so on went to close at multi-year highs last week. The CBOE volatility index is testing the lower end of its long-term band at 15. As we have been reiterating, a strong close below this level will mean that the equities are in a long-term bull-market. The Dow closed 81 points higher at 11,580 last week. This is the fourth positive weekly close for this index and the short-term trend remains very strong. This index can move higher to 11,867 or 12,000 in the near term. But the medium-term target for this index is 12,573. Key support for the index is around 11,000, where the 200-day moving average is positioned. Short-term uptrend will not be under threat as long as the index holds above this support. Crude climbing above the $90 mark last week is causing a lot of consternation. This sharp move above the $87 ceiling is a cause for concern since the next medium-term target if the commodity sustains above $87 is $97. Key long-term resistance is however a little above at $104. The New Year could be set alight by crude prices blazing higher. http://www.thehindubusinessline.com/iw/2010/12/26/stories/2010122650150700.htm adbuth -- You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en.
