WATCHLIST FOR THE WEEK 25AUG TO 29AUG 2008

WORLD MARKETS
(U.S.) DOW (11628) Likely to move up towards the resistance levels of 11700-11800. But long term still remains bearish. On reversal, it would again head down towards 11000-11200 support band. Penetration of this support band would give it a landing at 10000 levels.

(U.K.) FTSE 100 (5506) rallied from its crucial support at 5300. Surpassing of resistance 5600, though less likely amid low volumes, would project a target of 6000 levels.

(JAPAN) NIKKEI (12666) breached its crucial 12900 level and now likely to move down towards 12000 in days ahead.

(CHINA Hongkong) HANGSENG(20393) breached 21000. Bearish connotations point towards a fall towards 17000 in days ahead.

(CHINA) SHANGHAI (2405) Continued bearish tendency can cause the breach of support at 2300 levels. Then headed towards 2000 levels in medium to short term.

(INDIA) BSE SENSEX (14401) is in negative bias in short term. If 14000-13700 support band is respected then short term uptrend may continue. Otherwise, still a primary downtrend correction in a long term Bull market.


CRUDE OIL
Short Term Outlook: It reversed from the levels that we had expected in our UPDATES post of 21st August. Now it is again headed down towards $110 support. This support is also likely to be breached for a target of $100.
Medium to Long Term: Once the Beijing Olympics euphoria is over, demand for oil is expected to fall in China, the major consumer. This could help breach the crucial and technical trend deciding support of $100, offsetting the slowing of growth in China as well.
This falling crude oil price is only helping us to look sideways from the real problem i.e., the U.S. housing market. Nothing can help much until it bottoms out -the signs of which are nowhere to be seen, yet!

INFLATION
Recently there have been talks of some visible signs of inflation cooling down in the U.S.??
But here in India, it has surged up to 12.63. Now economists are talking of its peaking at 14 instead of 13. Interest rates may be revised upwards if this situation continues. Credit sqeeze?

CURRENCY
US$ weakened last week but may strengthen again. Crude and Dollar offsetting strength in each other one by one!

INDIA SPECIFIC
Once the J&K tempers cool down, discussion of ecnomic reforms may hot up. But trade unions are also waiting for that moment to show their presence, though not being given special heed by the media. However, the Indo-US nuke deal may change the agenda for the markets by next month.

Wishing you a happy trading day!