Technical Analysis

Sensex — After posting a low of around 13,780 (17 Aug 2007), the index rallied and closed above its previous all-time high of 15,869 (24 July 2007). The index is on a strong uptrend, exhibiting a sequence of higher highs and higher lows (higher tops and higher bottoms).

Wave Count: Sensex — Taking price extreme at 12,316 (16 March 2007), the index completed Wave (1) at 15,868 (24 July 2007). Wave (2) corrected the advance in Wave (1) toward 13,780 ( 17 August 2007). Wave (1) was from a low of 12,316 to a high of 15,868 (15,868 – 12,316 = 3,552 points). Currently we are into Wave (3) of the advance, which has a minimum price target of 17,332 (assuming Wave (1) = Wave (3) in “Price Movement”, 17,332 is derived as 13,780 +3,552. Assuming Wave (3) = 161.8% of Wave (1), the target levels are around 19,527. Wave (3) targets of (i) 17,332 is derived as 13,780+3,552. (ii) 19,527 is derived as 13,780+5,747, the level of 5,747 is derived as 161.8% of 3,552. The level of 13,780 is the assumed end of corrective Wave (2)

Nifty — Taking price extreme at 3,574 (16 March 2007), the Nifty completed Wave (1) at 4,648 (24 July 2007). Wave (2) corrected the advance in Wave (1) towards 4002 (17 Aug 2007). Wave (1) was from the low of 3,574 to the high of 4,648 (4,648 - 3,574 = 1074 points). Currently we are into Wave (3) of the advance, which has a minimum price target of 5,076 (assuming Wave (1) = Wave (3) in “Price Movement”. Assuming Wave (3) = 161.8% of Wave (1), the target levels are around 5740. Wave (3) targets of (i) 5,076 is derived as 4,002+1,074.

(ii) 5,740 is derived as 4,002+1,738, the level of 1,738 is derived as 161.8% of 1,074. The level of 4,002 is the assumed end of corrective Wave (2)

Moving Averages: Sensex — The index is trading above the 50 dma at 15,246 and 200 dma at 14,207. The Weekly moving averages are 10 wma = 15245, 20 wma = 14,852 , 50 wma = 14,067. The index has support at around the 15,246 level (50 dma and 10 wma). A weekly close below 15,246 could see the index enter a shortterm consolidation.