Weekly Newsletter - Nov 14 2009

Though the overall undertone remains positive over the longer term, in the near term the market will continue to be volatile and uncertain. Most indicators - economic or corporate - are throwing up mixed signals, which in turn adds to the anxiety about the future prospects. For every good news there is an equally disconcerting bad news. This has led to heightened volatility of late. Markets are struggling near annual highs but are unable to surge higher amid apprehensions that the ongoing recovery could get disrupted in the absence of the unprecedented government stimulus. Though most nations are yet to start reversing the extraordinary fire-fighting measures, and could delay the same in light of unconvincing data points, valuations are not cheap. Overseas inflows could taper off somewhat as we approach the end of the year. A major sell-off many not happen but even the upside doesn't appear to be too promising from here on.
Technically, 5000 is proving to be quite tough nut to crack for the bulls, as the Nifty hasn't managed to close above this level for a reasonably sustainable period. If it does manage to pierce this critical barrier in the near future, it could go as high as 5150. This could then turn out to be a major resistance, which if broken can take the Nifty up to 5350-5400. Of course, there could always be selling pressure at higher levels which means the higher end of the range will not be reached without any hiccups. On the way down, support is expected to kick in at around 4900 and 4850.