| Week Ahead: Nifty may peak at 5200 |
| MACRO TECHNICALS |
| Devangshu Datta / New Delhi October 1, 2007 |
| The Nifty has a possible top at 5200, but a reaction would find strong support at 4950. |
| Excellent volumes and strong carryover marked the settlement week. However all that was eclipsed by the fact that the Nifty crossed the 5000 level, finally closing out at 5021.35 points to register a gain of 3.8 per cent. |
| The Sensex was up 4.39 per cent, ending at 17291 points. Both major indices registered new all-time records. The Defty rose 4.17 per cent as the rupee strengthened to 9-year highs. |
| Institutional attitude remained positive with both FIIs and domestic mutual funds pouring funds into the market and increasing exposure as the indices rose. |
| The Nifty Junior shot up 4.79 per cent while the BSE 500 was up 3.98 per cent. Breadth was good with more advances than declines though volumes were concentrated on the futures and options segment. |
| Outlook: Obviously, the bull market is healthy and this intermediate trend is strong though momentum slowed on Friday. It's impossible to calculate targets with confidence since we are in a new zone. For what it's worth, the Nifty has a possible top at 5200. Reactions would find strong support at 4950. |
| Rationale: The market has been rising for around six-seven weeks so there is room for this intermediate trend to continue for another four-five weeks. Institutional exposure has increased above the 4800-level. Profit-booking would probably trigger renewed buying at about 4950. |
| Counter-view: The current uptrend was sparked by the US Federal Reserve cutting rates. The previous downtrend was also sparked by a US crisis in the subprime market. |
| Given the level of FII flows and the market's dependency on these, any unforeseen global event could prove to be the trigger for another decline. If the dollar tap was turned off, the market could crash. |
| Bulls & Bears: The biggest gains came from the financial sector with the Bank Nifty shooting up by 7.74 per cent |
