WEEKLY OUTLOOK: 26JAN TO 30JAN 2009

All the major world markets are trading near their crucial support levels, which is a sign of weakness.
Save China (Shanghai) all the markets are showing no signs of rallying in the near future. They are capped with strong resistances from where they could reverse back even if an attempt is made to rally from current levels.
It is a situation of multiple supports as well as formidable resistances near the current levels though, the tendency is to trend lower in the short term. High volatility in a narrow range is anticipated in the near future.
Markets are not picking up any positive news but waiting only for negative news of even the lesser magnitude.
Surge in Gold prices and lesser participation in equity is pointing towards money moving towards commodity. Inflation talk is out and deflation talk is in. Crude oil has lost its attraction. The impending deterioration in European economy is clearly reflected in the weakness of Euro; and it is yet to be seen if Obama mania can salvage the sinking ship of the U.S. economy.

Among the emerging markets (not fundamentally but technically) China does not seem to be in a mood to form a lower bottom other than the 1665 of Oct 2008. But India can do so. Still it could form a bottom somewhere between 6000 and 8000 over the short to medium term. Therefore, technically, these markets are now "buy for long term, investing in tranche on sharp declines from current levels".


INDIA BSE SENSEX (8674): The index has closed well below our 9000 mark. Momentum Indicators(MIs) are still in the negative territory and also diverging negatively again. Support around 8450 is possible where short positions could be squared off. But a firm close below 8500 levels will take it down to 8000 levels.
Inability to close above 9000 mark would keep the bulls under pressure and consequently would point towards moving below 8000 in days to come. Failure of 8000 would project 6000 levels on the horizon.
Any rally from above 8400 would be a muted one and the long positions(short term) initiated at these levels may be squared off soon on any rise up to 8900 to 9000 level. Fresh longs are advised only on a close above 9400.

INDIA NIFTY(2679): The closing below 2750 mark has turned outlook negative in the short term. Supports are at 2600 levels and then at 2500 levels. There could be a sharp rebound from the second support. Short positions may Watch out this level! However, the inability to give a close above 2850 would be signal to remain short for lower targets in days to come. Volatility index falling down to 34 implies that the range could get narrowed down for further consolidation and rallies may remain muted. Charts of bellwether stocks also point towards a consolidation phase at lower levels besides no inclination towards a rally in near term. But this could be the final phase of consolidation before we get a reasonable rally for few months. Medium to long term investors may look for opportunities in well researched counters during sharp declines from current levels. But short term traders should not expect sharp short term rallies soon but only sharp rebounds. Longs only above 2850 with strict stop loss. Or buy with strict stop loss at lower levels of 2500 for a sharp rebound only. Remember that inability to move past 2850 next week would be a cue to remain short for lower levels.

U.S. DOWJONES (8078): The index is hovering above its crucial level of 8000 for a few days. It is signal of weakness. Although the volume has improved, MIs are still in the negative territory and pointing downwards. Any rally from above 8000 could get terminated below 8550. Inability to close above 8400 early next week would be a cue to remain short for targets of 7400. The index faces formidable resistance from 8400 to 8550. Fresh longs are advised only above 8550.

U.K. FTSE100 (4053): The picture is not different here either. Inability to close above 4230 next week would be a cue to remain short for lower targets of 3800 levels. Any rally from above 3800 could be muted one and get terminated in the formidable resistance in 4250 area. Fresh longs are advised only on a close above 4300 levels.

JAPAN NIKKEI225 (7745): MIs have suddenly turned very negative and into the negative territory in this index. Failure to hold above 7600 on closing basis would be a signal for impending fall towards 7000 again. Failure to move above 7975 soon would be a signal to remain short in this market. Fresh longs only on a close above 8350. A close below 7000 anytime would be ominous for this market.

HONGKONG HANGSENG (12579): Failure of support at 12000 would take it to 11000 next week. Chart indicators of this market are no different from other markets. It also faces formidable resistance in the 13000 and then 14000 levels. Any rally would get terminated in these areas.

CHINA SHANGHAI (1990): As said earlier, this market is presently the strongest one among the lot. Just poised below its resistance at 2000 is a positive signal. A move past here would take it towards 2100. If there is a firm weekly close above 2100 in the coming days then it would deemed to have put in place its bottom at October lows(1665) for this bear market. However, there would be certain more requirements of fullfilling some important technical ceremonies before jumping the gun at 2100. For example, a reversal from 2100 area and then a close above 2100 with good volumes would be a confirmation of medium term uptrend. Until then, just remain long with stop loss placed at 1900. Also keep watching the volume on rise.

GOLD: A reversal from $900/$920 area and then holding above $850 would be a bullish sign. Accumulate on reversal with final stop at $800. A rise above $900 again after reversal from 850 area would be cue to remain long for medium term.


STOCK TECHNICALS
The overall sentiment is pointing towards consolidation at lower levels.

RELIANCE: Consolidation at lower levels is anticipated. No trading idea for the week. But long term investors can pick at lower levels of 1000 with final stop at 900.

SBI: It has turned bearish. No trading idea for this stock this week. Long term investors should watch out at 1000 levels but be wary of its bearish outlook. It can trend lower from 1000 also if the overall sentiment remains negative. The down targets in medium term could be up to 750.

INFOSYS: It would be the favourite of long term investors though, currently it is also giving negative signals. Accumulation for long term below 1100 with final stop at 900 is suggested. No trading idea for this week.

19JAN TO 23JAN 2009

There is no separate out look for India this week.

All the markets around the world are looking towards the U.S. markets -especially the DOW for a clue next week. Will there be an Obama rally or not? If we get a boost at current levels from this hope then this could be a turning point for medium term where we would have put in place a bottom at November lows and also get propelled beyond the recent peaks that are acting as formidable resistances.

U.S. DOW(8281): The hope of Obama rally could have helped this index to close above 8000 consistently, but the breach of 8000 implies that it needs to move lower in the medium term once again. There is a lot of talk about having found a bottom for this bear market and if it could rally from current levels then it has main resistance is at 8563 this week. Go long above here for target of 9175. But inability to close above 8400 soon will pull it down below 8000 and towards the lows of Nov 2008.

U.K. FTSE100(4147): Inability to close above 4315 early next week would be a cue to remain short for lower targets of 3800 in short to medium term. Resistance above 4300 levels would be 4385. Go long above 4385 for targets of 4650. But momentum indicators are lurking in the negative zone, similar to the DOW, which is a sign of continued downtrend.

JAPAN NIKKEI(8230): Inability to close above 8500 early next week would be a cue to go short for lower targets of 7600 in short to medium term. Resistance above 8500 would be at 8660. Go long above 8660 for targets of 9500 levels. Momentum indicators on this chart also are in the negative territory, implying that it could also trend according to world markets only and not on its own.

CHINA SHANGHAI(1954): This index seems to have started trending up contrary to the world trend. Momentum indicators are also in the positive territory and trending up. Volume has picked up, signalling the interest of investors in this market. Some world participants could have started buying into this most talked about emerging market besides India. Yet, it would have to surpass the resistance at 2100 levels to prove this. Immediate support is at 1880-1920 band.

INDIA BSE SENSEX(9324): Inability to close above the levels of 9510 soon would be a cue to remain short and exit short term longs. Go long only on a close above 9850. On the other hand, a close below 9000 would imply continued weakness and then the index could trend lower towards the previous lows in short to medium term. Supports on the way down would be at 8500 and 8300 levels.

12JAN TO 16JAN 2009

It is now hard to believe that all the accounting-sins are awash with the self-exposure of SATYAM. Who knows who's next in line because there must be many more still out there. It would not be wise to go discreetly about it and demonstrate only the salvaging capabilities. The venom should be drained from the system, sooner the better to restore credibility. The onus lies solely on the accounting firms besides regulatory authorities.
However, as said earlier in the posts, it would be unfair to point finger only at India because there were no strict accounting regulations all around the world that caused this recession also.

The mood is pessimistic though, the bulls still hoping for the uptrend to continue. But under the given circumstances, there is no likelihood of big buying by the Institutional investors thereby, not helping to move above the range beyond 10500 to maintain the uptrend.
Momentum indicators have entered into negative territory and pointing downwards. Many of the favourite stocks have breached their short term trend lines; implying that their uptrend is over.
The expected reduction in petroleum prices and initiating the earning season by INFOSYS on Tuesday next week, are the two triggers to be taken into account.
The proposed Obama stimulant has already invoked luke warm response in the face of more pain in the offing in the form of deteriorating earnings and economic data.
To sum it up all, the uptrend would require big positive triggers that are not anywhere in the sight.

TECHNICALLY
If the sensex/nifty manage to close above 9720/2940 then there could be another attempt towards 10500.But it would rather be wise to accumulate put options(Feb series) with every rise above 3000 on nifty keeping a stop loss at 3150. Going long would require more watchful eyes.

On the other hand, if the sensex/nifty give a close below 9140/2750 then exit longs and remain short for lower targets upto 8500/2600. The trend would have changed to downwards below 9140/2750 with a probable support at 9000. Yet a reversal from below this level would be short lived.

WELCOME 2009!

There could be a good start on Monday on the back of the stimulus package announced last Friday, besides strong cues from the world markets. But we are faced with strong resistance band between 10700 and 11000 on the SENSEX and between 3150 and 3250 on NIFTY.

Low volumes and declining Open Interest in derivatives segment point towards a lesser hope of a sustainable rally in the near future. Investors are sitting fingers crossed over the impending quarterly results and short term traders are booking profits in longs at current levels. In such a scenario it is a mood of lesser enthusiasm though, the element of surprise is a peculiar characteristic of stock markets. So, it would be a surprise if move above 11000 on Sensex in the near term. Currently the BSE SENSEX is at about 10000 levels and it is only 1000 points away from that crucial medium term trend deciding level of 11000(NIFTY 3250).

TECHNICAL LEVELS:
Resistance band for this uptrend is 10700-11000 for Sensex and 3150-3250 for Nifty.
Uptrend continues until the SENSEX holds above 9150(medium term stop loss).
Stop loss for long holdings would be 9500(Short term stop loss).
Fresh longs above 10320 only. Upper Target 10950.
Inability to move past 10200-10300 band would be a cue to go short for lower tartget 9500.

Please remember that if there is going to be a rally above the given resistances, it would be a bear market rally that could fizzle out any time. Maiximum target for such a rally would be 12000 on Sensex and 3500 on NIFTY.

Please also keep a watch on updates from time to time.