OUTLOOK FOR THE WEEK 20080713

(Please read carefully each and every word before arriving at some conclusion. The levels given here are to be treated as on closing basis and one should square-off positions before waiting for a precise hit of the given targets. Also please note that the given levels are for the "near term" which may or may not be achieved in two weeks either. Intra day trading is not recommended as per this)


Domestic political developments, Crude Oil prices, Inflation and the US financial health would be the main drivers of the markets in near term. The earnings season doesn’t seem to infuse any jubilation, is apparent from the reaction to Infosys results. S&P, the rating agency is adding to our woes by warning of a downgrade probability if there is slowing of growth due to inflation.

DOMESTIC POLITICS
Domestic politics would be the main cause of volatility. The news channels, with the help of opposition, would make or break the government many times until 22nd July. This could cause long streaks up and down on daily charts. The parliament floor test on 22nd would be a turning point for the direction of the markets. Leftists may develop cold feet by then perhaps, as the mood of the nation is in favour of the nuke deal. There would be a very sharp move upwards if trust vote is in favour and vice versa.

WORLD MARKETS
The US and the UK markets are pointing towards more downside in near term. That would certainly have an impact on world markets besides ours.

OUR MARKETS
Shorts have almost been covered, implying that there isn’t enough cushion to arrest a down move. Moreover, expecting a rebound from the present levels would be a contrary view. Since the trend is almost downwards, fresh short positions would help bulls in rebounds from support levels intermittently.

TECHNICAL (please note down the given levels for ready reference): Coming to the charts, there aren’t enough positive signs in weekly or daily charts. However, if SENSEX holds the level of 13300(currently at 13470) and reverses from here then expect an up move towards 14100 or 14500. Keep in mind that it is a bear market where an uptrend has its limitations.
But a close below 13290 (NIFTY 3988) would take it down towards 12400 (NIFTY 3700) in near term. Sensex may take support "for some time" at 12800(NIFTY 3850) level on its way down.
(It may not yet; but a close below 12300 would open a target of 11000 levels for medium term).
Wishing you a happy trading!!!
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UPDATES (ONLY IF NECESSARY) WOULD APPEAR EITHER AT 0900hrs, 1230hrs, 1430hrs OR 2100hrs. (-5:30hrs GMT)