WEEKLY MARKET UPDATE AS ON MONDAY 29 th OCTOBER 2012

NIFTY SPOT - (5664)

In our last weekly update we had mentioned that if the NIFTY holds above 5633, then it can rally to 5745 / 5766 in the next 3-5 days, which should be used to sell for a fall of 200/300 points. Accordingly, NIFTY made a high of 5722 (at our first resistance point) and  fell down slowly to make a low of 5642 on friday and closed the week @ 5664. One noteworthy point of last weeks trade was that on two differrent days the global markets were down strongly and also the DOW JONES index was down by over 200 points, however NIFTY held on its own strength and finally fell only by around 80 points from the weekly high. This itself indicates that the NIFTY has lot of inherent strength and can post a strong rally from around 5633 level. In the current week NIFTY has support @ 5617 - 5578 - 5530 while resistance can be expected at 5719 - 5745 - 5815 - 5925. Ideally in the current week expect the NIFTY to trade with a minor negative bias till tuesday, during which it can fall down to levels of around 5617. If in the first two days if the NIFTY does not fall much or falls only till 5617, then it should be taken as a sign of bullishness.  In such a scenario the NIFTY can post a strong rise of 144 / 233 points from the weekly low once it moves above 5700 / 5719, to higher targets of 5761 - 5851 - 5925. Only if the NIFTY breaks down and trades below 5617, can it fall down to 5578 - 5530. As this is not normally expected, any nasty surprises from the RBI credit policy on tuesday can trigger this fall. As we have the RBI credit policy in the current week which will make the current weeks NIFTY movement news based. We are fully aware  that the RBI policy has the potential to make or break the indices and would hence suggest readers to be very cautious and also keep minimum postions till the RBI credit policy is finally through. We would have a buy on decline strategy but would also like to wait for the RBI poilcy to give further confirmation to the same