HDFC Sec Tech view: Sensex 10,700 is the key

The Sensex closed lower amidst a quiet trading session on Dalal Street, the Sensex opened at 10,922 went on to hit a low of 10,798 and finally closed at 10,858 down 71 points over its previous close.

The outlook remains the same that the B wave corrective rally is nearing its end and the C wave down should start soon.

The move on the downside could be destructive and as for the past 10 trading sessions we again recommend you to continue building short positions in the markets and try to move out of the long side of the market.

As stated in our report dated 13th July 2006 "When the C-wave starts there would be no place to hide, except cash."

For today the level to watch out will be 10,700 which if broken will confirm the ENDING DIAGONAL pattern and thus open up possibilities of a fall to 9600 levels at the minimum.

Also if the Sensex were to start declining from these levels with out crossing 10,940 will pop up another bearish pattern that of a 5th wave failure within the corrective wave up from 9745 levels.

The outlook thus remains extremely bearish and it is advisable for the readers to at least hedge there long positions by buying Nifty Put options.

On the upside strong resistance will come in the 10,960-11,060 ranges. A break below 10,700 will be a major hint that the C-wave has started.