Nifty (5702.3)

The move from the 5070 low that started last week appears to have ample steam left to drive the index higher to 5783 or even 5977. But investors ought to stay wary until the index moves firmly beyond the previous peak at 5736. The short term support for the Nifty lies at 5522 and then 5469. Traders can buy in dips as long the index remains above the second support.

The target for the fifth wave from 3573 falls at 5611, 5927 and then 6290. If the rally continues beyond 5800, then we can peg the next medium term target at 5927. The medium term outlook will turn negative only if the index falls below 5317.

Global Cues

CBOE Volatility Index that measures investors’ fear level, fell to 19 by Friday after recording a short-term high at 24 in the previous week. This implies that investor’s trepidation decreased last week as global equities stabilised themselves. The DJIA, which led the previous week’s sell-off, recovered after a minor wobble on Monday. But the short-term outlook for this index stays negative as long as it remains below 13900. Asian markets (with the exception of Japan) turned in a strong performance. Latin American markets were relatively subdued.

Nymex crude created a flutter on Friday by recording a new peak at $92.2. The commodity bounced off the support at $84 indicated last week. The near term targets remain at $94 and then $103. It would be interesting to see how equities react to crude at $100!