Nifty State Review for week ended 19 Sep'08

All the global equity markets including ours saw a highly volatile trade. Some of the global equity market went as high as 9 - 10% in a single trading session which could be the craziest we had ever seen. Lot of drama happened in the US market during the week with both negative and positive news at its extremes like Lehman brothers bankruptcy failing, government decision to bail out sick financial institutions and improving liquidity by injecting billion of dollars, etc.

Due to those extreme happenings, US market had a very volatile trading sessions throughout the week and in the same time it has not failed to influence the world market to dance to its tunes. Nifty also traded in a wide range with 3800 on the lower side and 4263 on the higher side for the week. Nifty touched its previous July'08 low at around 3800 and bounced heavily by recovering almost 200 points on the same day itself to close at 4038 on Thursday. On Friday nifty opened with a huge gap up influenced by global market and closed to gain more than 5%.

It is true that in a bear market there would be sharp dead cat bounces, but last week bounce doesn't seems to be dead cat bounce rather a live cat bounce. Such behaviours confuses even a seasoned trader. One day it falls as if the sky is falling and the other day moves up as if sky is the limit.

For week starting 22 Sep'08 we can expect some interesting and important things to happen. This week may be important for the reason that this week's action will give some guidance on the direction of the trend in near future. Either the ongoing momentum can continue to break past the important resistances or it may fall due to possible profit booking at higher levels and breach the establish support last week at around 3800 to a new low.