It was the worst terror attack in the history of India and probably nothing of this kind has ever happened before. Markets, schools and colleges were shut on Thursday in Mumbai, the financial capital of India. The city is slowly limping back to normalcy but with a deep scar on its horizon. The iconic Taj Mahal hotel is badly damaged and will need lots of efforts to be back as it was and it has a history of 105 years to boast of.
Stock markets world over rallied on the Citibank bailout with the DOW JONES gaining 782 points or 9.73% to close at 8829. The NASDAQ gained 151.22 points or 10.93% to close at 1535 points. Asian markets were also strong and gained in line with the American markets with the NIKKEI gaining 601 points or 7.61 % to close at 8512 and the HANG SENG index gaining 1229 points or 9.71% to close at 13888. The BSESENSEX gained 177 points or 1.99 % to close at 9092. The NIFTY closed at 2755.10 gaining 62 points or 2.31%. It may be mentioned here that inspite of the terror attacks on Wednesday followed by markets holiday on Thursday and the November expiry being shifted to Friday, markets closed positive on Friday and for the week. It may be interesting to note that this is only the second positive close on a monthly basis for the Nifty in the current calendar year 2008 and November has ended.
What does the week ahead hold? Terror struck market has never fallen but the true test will be next week. If they are able to hold on then things will certainly improve going forward. Inflation is also steadily coming under control and it is expected that with FII’S going on leave in the middle of December their selling pressure should subside. It is also expected that the beginning of January will see new allocations hopefully and the advent of the December quarter results may see markets bottoming out and moving up. I am a little confused about the direction of the markets this week but do understand that there should be a decisive move this week in either direction. An upward breakout beyond the 10000 mark on the Sensex will see optimism returning to the markets and a break below 8000 bring pessimism to the markets.
The open interest is very low which is a positive indicator and so is the fact that selling seems to be reducing. Poor volumes are a cause of concern but the failure of the market to go down is positive. On the negative side is that we will be in the holiday season in two to three weeks from now and this period will be crucial. The market is once again positively biased this week.
BSE SENSEX has support at the 8765 level, then at 8230 and then the psychological level of 8000. Immediate resistance exists at 9300 and then at 9830 with strong resistance at 10570. The Nifty has resistances at the 2795-2815 level, then around 2880 and then at the 2975 level. It has support at 2700-2705, then at 2660, 2615 and very strong support at the 2500 levels.
Markets have a positive trading bias but an uncanny feeling indicates that the movement may catch people by surprise. Trade with the trend and a breakout or breakdown is likely during the current week. The NIFTY below the 2630 level and above the 2850 levels will be crucial and if either of this level is breached and then maintained we could see a sharp movement in that direction.
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