Nanofluids are tailored nano- colloidal suspensions of nanoparticles in a suitable base fluid. This present work investigates the absorption spectrum in TiO2-water nanofluids to identify the potential application of nanofluids in Direct Absorption Solar Collectors (DASC). Nanoparticles of Titanium dioxide (TiO2) are prepared by sol gel and characterized by X Ray Diffraction (XRD) and Scanning Electron Microscopy (SEM). TiO2-water nanofluids with weight fraction of 0.1% are prepared by a two-step process with sonication. The prepared nanofluids are investigated for their stability by a gravity sedimentation method and for their optical property by UV-Vis spectroscopy. Stability of nanofluid is essential for the applications of nanofluid in DASC. TiO2 nanoparticles with a crystallite size of 43nm are obtained .The SEM image reveals the agglomerated state of TiO2 nanoparticles and the stability of TiO2 nanofluid is reported as 9-10days. UV results indicate the decrease in absorption from 440-500nm, complete absorption from 500-700nm and increase in absorption from 700-900nm.TiO2 nanofluids are recommended as potential candidates for DASC in UV and IR regions