| Week Ahead: Markets appear mildly bullish |
| MACRO TECHNICALS |
| Devangshu Datta / New Delhi February 5, 2007 |
| The Nifty is likely to trade between 4000 and 4350 points till the Budget. |
| The market saw little apparent change this week but the mood was mildly bullish. The Sensex hit a new high and closed up by 0.85 per cent at 14,403.77 points. |
| The Nifty was up 0.86 per cent at 4183.5 and also touched new highs. The Defty gained 1.11 per cent as the rupee hardened after the RBI hiked a policy rate. |
| Breadth signals were balanced. The broad-based BSE 500 gained 0.71 per cent. Advances and declines approximately matched each other. The Bank Nifty dropped 0.52 per cent after the rate hike. The CNX IT also lost a little ground (0.11 per cent down). |
| Outlook: By definition a market that is reaching new highs must be bullish and the chart formations back that. We can compute a target of about 4250 for the Nifty on price formation alone and volumes gained enough on Friday for that to be reasonably achievable. |
| However, momentum signals have not backed the price move solidly. I think the market will register mild gains until Budget week. |
| Rationale: Volumes have been reasonable and the price formations are also bullish. Momentum and breadth signals have not been bearish but they have not been as strong as one would want in a market trading at record levels. |
| The institutional attitude seems to suggest fence-sitting or bearishness by both FIs and FIIs. Traders are likely to stay long. The trigger in either direction will probably be the impending Budget. Until then, the Nifty is likely to stay inside a narrow range of 4000-4350. |
| Counter-view: The Budget is likely to be a defining moment. It tends to be bearish in its impact more often than not. Be prepared for a big move post-Budget. It |
