| Week Ahead: Banking stocks drive the rally |
| MACRO TECHNICALS |
| Devangshu Datta / New Delhi November 5, 2007 |
| The Nifty is likely to consolidate at current levels, with an upward bias. |
| The market shot up on Monday and range-traded for the rest of the week. The Nifty closed at 5932 points for a gain of 4.04 per cent, briefly crossing above the 6000-level. The Sensex was up 3.81 per cent at 19976 points after hitting 20,000 plus. |
| The Defty rose 4.38 per cent as the rupee strengthened yet again after the RBI announced a marginally tighter monetary policy. The Nifty Junior was up 3.2 per cent. |
| Breadth was positive and volumes were fairly high except on Friday. The CNX Midcap gained 1.79 per cent while the BSE 500 was ahead by 3.92 per cent. |
| FIIs were net buyers as they appeared to have absorbed the implications of clarified participatory notes policy but mutual funds remained net sellers. |
| The Bank Nifty delivered an extraordinary gain of 9.6 per cent on a relief rally after the credit policy. The CNX IT was about the only sectoral loser, down 1.65 per cent. |
| Outlook: Consolidation within the broad range of 5700-6000 seems to be the current pattern. Look for closes outside this zone to set the next trend. Friday's trading pattern ended strong so, there is some reason to presume an upside is more likely. But it may not come immediately. |
| Rationale: The market is swinging through an unusually high range of almost 200 Nifty points per day. Diwali usually tends to be bearish because retail and operator volumes dwindle but the FIIs are still net buyers and they have the resources to keep the market buoyant. The next upwards breakout would set a target of about 6300 Nifty. |
| Counter-view: Friday's trading session was open to several conflicting interpretations. Prices moved up through the session |
