WEEKLY OUTLOOK: 02FEB TO 06FEB 2009

FUNDAMENTALLY
Although the markets are trying to move up sometimes on some positive cue, yet its proving to be a slippery climb every time markets move up. Obama's efforts evoke positive response occasionally from the markets but the deteriorating economic data from around the world is weighing heavy on that.

Earnings in India have not been that bad over all, but the guidance given by some front runners should be an alarm for the next quarters. The earnings in Japan and the U.S. particularly have been disappointing.

Another doubt which is making rounds is that there is no clarity about the health status of hedge-funds and sovereign-funds amid this turmoil. Even the big brains at Davos are groping in the dark to find the exact depth of this pit.

But there are signs of liquidity easing somewhat but no one is willing to lend amid deteriorating economic figures and the inability of economists to gauge the exact magnitude of the impending turmoil.

Therefore, every thing depends upon the "economic data" in the weeks ahead which would guide the markets. Stimulus packages would only give some upward bounce technically for a short term but not initiate a rally unless there is a bottom in sight in the housing data, the consumer confidence and the employment figures etc.

GOLD: Long term investors may accumulate gold on every decline up to $850 with final stop loss at $790. Long term target is $1000 and then $1200.


TECHNICALLY
Almost all the charts of major indexes are forming a somewhat 'descending triangle' like pattern for over three months now. But there doesn't seem to be any mention of this when reading some important technical analysts. Perhaps this could be a mirage like situation but the pattern is definitely descending if not a perfect triangle. Therefore, this pattern could be pointing towards another trough in the medium to longer term, lower than the OCT/NOV lows.
However, the overall outlook is neutral but with a slight tilt towards negative sentiment. Yet the uptrend track is still slippery until the given important resistances are blown off decisively.

U.S. DOW (8000): Could not close above our given level above 8400 and reversed from that area to close just at the psychological mark 8000. Things would turn neutral for this index only on a close above 8500 resistance levels. Until then it could drift lower towards its previous low of 7400 levels if there is no sustainable bounce from 7850. Watch out for a sudden bounce from 7850 levels though, the Momentum Indicators(MIs) have started diverging towards the negative zone; yet not very pointedly.

U.K. FTSE100 (4150): This index also could not close above our given 4300 level and drifted lower to close near its support at 4100. Failure to hold 4100 on closing basis would pull the index lower towards its crucial support at 3800 levels. But also, watch out 3957 mark for any bounce though, the MIs are diverging negatively but still not overtly negative; so to speak. A sustainable bounce from this level could help it remain in neutral mode for some more time. But it would require to close above 4350 resistance level to turn short term trend positive in this index.

JAPAN NIKKEI (7994): This market also failed to close above our 8350 mark last week and reversed to close at psychological level almost 8000. Although the MIs are not overtly negative, it could be headed down towards 7400 support level if didn't get a bounce from 7671 mark. But it would need to close above 8350 mark to turn things positive for itself in the short term.

HONGKONG HANGSENG (13278): Here also the MIs are still in the negative territory but turned flat. The outlook is neutral as long as 11800 level is holding on the downside. Breach of this mark would imply test of previous lows.

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 back from 2100 area and then again 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.

INDIA BSE SENSEX (9424): Formation on the weekly charts point towards a positive outlook. It has been respecting 8500 levels since November. But over the last three weeks, it has been facing resistance in the area little above 9400 where it has closed this week as well. So, it would have to be seen if it can remain above this level this coming week as well; and that would be a very positive signal.
MIs are turning positive but the resistances are at 9550 and 9768. But a close above 10700 is needed to make things positive for this index in the medium term.
On the other hand, a close below 8630 would be the end of this short term uptrend. Further, a breach of 8500 would bring 6000 mark in the reckoning.

INDIA NIFTY (2875): Main Resistance for the week is at 2904. A close above here would be a positive signal and could take the index to 3147 again. medium term would turn positive only above 3147. For the week ahead, the band between 2772 and 2800 should lend support. A close below would signal the weakening of short term uptrend. A close below 2660 would terminate the present uptrend.


STOCK TECHNICAL

RELIANCE: A robust close above 1274 last week has negated the negative outlook in the short term. It may rise up to 1400 this week. But be watch ful in this area. Stop loss for swing traders is 1200. Buy on a decline with a stop here.

INFOSYS: Once past 1320 on closing basis, it could move up to 1400 and 1450. Accumulate on decline for long term with final stop at 1190.

SBI : It is still in negative mode and needs to close above 1250 to negate this view. Buy only above 1250 for a target of 1375. Medium term turns positive only above here.