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.