"Outlook for the Week "FOMC meet on 11th holds key for Markets"

'Our indices have posted gains during last week, amidst huge volatility at psychological levels of 6000(Nifty) & 20000 (Sensex); as investors preferred booking profits, and wished to stay in cash, with the past experience, markets turning weak, number of times. However, Both Nifty and Sensex have closed above October closings on friday, while nifty closed at all time highest closing, confirms strength in the markets. Nifty posted new highs successively after breaching previous high, while Sensex is struggling to close above 20K. US markets are expected to react to the FOMC meet decision on 11th on interest rates, Discount rates, and out look on economy to be revealed by Mr.Bernarke, chairman.

This week is important for our markets too, as corporates would be pressing sales on investments for raising liquidity for meeting Advance Tax payments, by 15th December 2007, for this quarter. We can expect huge volatility on Nifty, as the outstanding positions are high, and information flow from overseas as well as domestically, can influence the markets in either direction. Nifty might trade in a broad range of 5850 to 6050 during the week and break out in either direction, with volumes decides the short term trend, while the long term and medium term trend are firmly positive for our markets.

Strategy for the Weak: Buy 5750 calls on weakness and 6050 puts on rallies for quick returns.

Outlook for Thursday "Nifty likely to clear 6000"

Our indices have opened firm and traded strong throughout the session on wednesday, with all round participation, adding open interest position in both stock futures & index futures. Nifty has closed at all time high closing on daily charts, clearing October closing of 5900.65, clearly given a break out on upside, as predicted in our report dated 29.11.2007; while Sensex is still struggling to clear October Closing of 19837.99 (which might take place today)

 

"Since our indices, both Nifty and Sensex have completed 61.8% of retracement of previous week's range, they should give an upward break out initiating a fresh rally from today which might take the indices to test previous highs in december, with huge volatility."(from 29.11.2007 report)

 

Wednesday's recovery in asian markets, and rally in European markets and US markets overnight, cofirms gap up opening for our indices today, sustenance of the same for initial one hour, forces short squeeze, as many players are expecting that 6000 level is very difficult to cross. Markets will be firm till 11.12.2007 where FOMC will come out with the decision on interest rates, out look for future. Since, Bull and bear camps are equal in number at this point, huge volatility can be expected.

 

Strategy for the Day: Buy 5800 calls on weakness and 6000 puts on rallies for quick returns.

Out Look for December

"Our indices have closed positive on Friday & week on week basis, after smooth roll over of positions to December Series, however, closed negative over October closings, amidst huge volatility during November. Markets have given a break out on upside by closing above 20DSMA on 30.11.2007, and shall consolidate at higher levels till the unfolding of events viz., FOMC meeting on 11.12.2007; Data on Advance Tax Payment by 15.12.2007 and the out come of Gujarath & Himachal Pradesh assembly elections result by 22.12.2007.

 

Since April 2005, our markets have not posted 2 consecutive negative closings at any point of time, and after every correction indices have posted new highs. Generally December is a good month for equities, barring unforeseen developments gloabally, this month also should have a positive closing over November, ofcourse with volatility, as we are at all time highs.

 

For confidently going long on markets clearing of old highs on Nifty / Sensex with volumes and participation is a must, till such time the markets are likely to consolidate in a wider range, and remain to be a trading market during the month. The levels to watch for any weakness are 19200 (Sensex) and 5740 (Nifty)