Weekly Trading Highlights. 22nd sep. 2008.

The week that went by
Global markets witnessed one of the most volatile trades in the week that went by - a heavy fall and a tremendous pull back rally.
The global stock indices plunked heavily on the back of the failure news from the US financial giant Lehman Brothers, and further from AIG
Inc., and then Merrill Lynch which was later bought by Bank of America. AIG had to seek refuge with the government to avoid a collapse.
Later the markets recovered as a result of the decision announced by the major central banks to pump liquidity heavily into the banking
systems to overcome the turmoil. Apart from this, the short covering, as a result of the temporary ban imposed by US and UK, added to the
surge in the European and US markets. US’ Securities Exchange Commission banned short selling in 799 financial stocks; while UK.’s
Financial Service Authority also banned the short-selling in Financial company shares.
Almost all the stock exchanges through out the world rallied tremendously, recovering about 7-9% from the week’s low. Russia led the rally with
a 22% jump from the week’s low.
NSE Nifty, after opening at 4231, crashed to 3799 in the first 4 days of the week’s trading. The recovery emerged from there and the index
closed at 4245, making a weekly gain of 14 points. BSE Sensex opened at 13663, and fell to 12558, falling nearly 1100 points; later recovered the
loss and closed at 14042.
Technical Outlook :
The Indian markets have bounced back remarkable from the week’s lows.
Momentum indicators are indicating some more upside. Stochastic Oscillators is showing the upside to continue a little further. RSI is trading
above the 50 points mark.
At current levels 4380 is expected to act as the Critical level for the NSE Nifty. A trade above this can find resistance at 4490. The major support
for the week can be expected to come at 4175, followed by 3975.
Market is expected to open with a positive bias and can show some more upside in the first trading sessions of the coming week. later, selling
pressure is expected to emerge from higher levels.
Week Ahead :
The global market sentiments are going to guide the market in the week ahead. After the initial reaction the rising Crude Oil price and the Indo-
US nuclear deal come back to the scenario.
The lack of substantiative open interest build up in the Nifty futures, despite of such a tremendous rally is indicative that the upside is more
contributed by short-covering, rather than fresh positions buildups. The fact that the global market rally, especially those in US and UK, who
led the pack, are due to the short-covering is also adding to the cause of concern.
The chances for the index to sustain at higher levels is doubtful, at this point of time.