Daily Outlook for Jan-23-2008

NSE Nifty(4899.3):Another day of merciless slaughtering sent the Indian stocks reeling to over 16% intraday loss. Just when it seemed the market was like a bottomless pit, Nifty hit a major weekly trendline (as can be seen in the chart above)and bounced off it to finish the day far less uglier. This trendline also coincides with a speedline and hence the technical importance of this level gains further weight. Coupled with the fact the markets are deeply oversold, the chances of market getting atleast a temporary reprieve looks far higher now. The support for Nifty are at 4448 and 4240 and resistance are at 5008 and 5192.

The fact that FED has cut interest rates by 75bps a week ahead of its scheduled meeting, is an admission that something is seriously wrong with their economy. The previous time FED did such a thing was when it was faced with a recession and a terrorist attack. Also, during the last 16 interest rate cycles, there has been a grand total of one soft landing. With this historical fact, the odds of a soft landing being 1/16th, is it worth basing your investment strategy upon this? Incidentally, yesterdays close on the Chinese Shanghai below the support of 4800 has put it in a primary downtrend.