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<b>Week Ahead:</b> Market to range-trade

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Devangshu Datta New Delhi
Week Ahead: Market to range-trade
Devangshu Datta / New Delhi April 2, 2007
The market is likely to trade between 3725-3925 points. There will be selling pressure because of the rate hike, but the support at 3725-3750 is likely to hold.
 
The market coped well enough with the settlement although there was high daily volatility. It only ended marginally down.
 
The Sensex closed at 13072.1 points for a loss of 1.61 per cent. The Nifty was down 1.02 per cent at the Friday close of 3821.55. The Defty lost 0.80 per cent because the rupee has hardened significantly.
 
Breadth was quite positive despite losses in most large caps. Volumes were good though not exceptional. The Bank Nifty dipped by 3.8 per cent week-on-week and it is likely to have a further downside next week due to the surprise rate hike by the RBI.
 
The BSE-500 was down 1.17 per cent and the CNX IT lost 3.52 per cent. The FIIs were net buyers while the mutual funds continued to sell.
 
Outlook: The market is likely to trade between 3725-3925 points. There will be selling pressure because of the rate hike. But the support at 3725-3750 is likely to hold. The long-term signals are reasonably positive.
 
Rationale: The intermediate downtrend that started on February 9 appears to have petered out. We have seen higher bottoms at 3550 and then 3575. The support has come along the 200-day moving average, which suggests that the long-term trend remains okay.
 
Counter-view: Liquidity will be at a premium for another couple of weeks as the banking system adjusts to the new rate hike. Interest rates are likely to rise. That is almost always inversely correlated with stock prices.
 
Results season is also upon us

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First Published: Apr 02 2007 | 1:35 AM IST

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