Technical outlook for August 2,2007

If last Friday was bad, Wednesday was worse for the markets as the
benchmark Indices closed deep in the red (4% down). It was a total
carnage with every support melting down as a hot knife passing
through the butter. The Bears attacked the pillars of the rally RIL
and SBI, as a result; the rest was just a formality as is seen from
the A/D ratio (1:5). Of the Sectoral Indices, the BSE Realty was the
worst hit. Volumes were higher during the fall.

As expected we saw a pullback in the Nifty hitting 4,532 points but
from the opening bell we witnessed bull liquidation probably from
the positional players coupled with some short selling. The impact
of the fall was so severe that the Nifty touched the S1 of the month

i.e. 4,339 points on the first day itself. We are seeing a lower top
formation in the Nifty. Unless the Nifty decisively closes above
4,535 points, upside is capped at the moment.

The 50% retracement in the Sensex is at 18,910 points was almost
achieved yesterday while immediate support in the Nifty is at 4,310
points (61.8% retracement of 4,100-4,647 points rally). The newly
drawn trendline in brown is currently pegged at 4,291 points. High
risk intraday traders can go longs with a strict stop loss below 4,282
points. Resistance in rallies is pegged is pegged at 4406 points.
Trade with caution as volatility is likely to prevail for couple of
sessions more.