Week Ahead: Mixed trends make mkts unpredictable

MACRO TECHNICALS

Conflicting signals make it almost impossible to make short-term projections. The market seems to be waiting for an external trigger with the bulls and bears evenly matched.

The week saw two big swing sessions on Monday and Wednesday. But these went in opposite directions and the net effect was to leave the indices trading almost unchanged from last week's levels.

The Nifty closed at 3478 points, nominally up by 0.2 per cent. The Sensex closed at 12009, up by 0.76 per cent. The Defty was up 0.47 per cent as the rupee continued to strengthen.

The breadth of the market stayed marginally positive with more share advances than share declines. Volumes were high. The BSE500 moved up 0.62 per cent. The BankNifty outperformed the broad market, moving up by a big 5.35 per cent.

Outlook: It's very difficult to call next week's direction given the lack of a clear trend. The Nifty is persistently testing resistance at between 3450-3500 without being able to make and sustain a clear breakout.

The momentum indicators are weak but breadth and volume signals seem positive. A close above 3500 would create a target of 3625. A close below 3450 would probably lead to a dip till 3325. Any close outside 3425-3500 would mean at least a 100-point move in the direction of breakout.

Rationale: Conflicting signals combined to a range-trading market make it almost impossible to make short-term projections. Weak momentum could be a lead signal; on the other hand, volumes are good and that's positive. The time element is in favour of bears