17000 beckons Sensex

Weekly Technical Analysis

The markets began the week on a soft note, but ended with a bang, thanks to the bold 50 basis points rate cut by the US Federal Reserve.

The Sensex started with a loss of 200 points, but it ended with a hefty gain of 960 points. In the process, the index crossed a new landmark of 16,000 and also registered its biggest-ever, single-day gain of 654 points during the week.

The index swung in a broad range of 1,149 points "" from a low of 15,467, it touched a new all-time, intra-day high of 16,617, before ending at 16,564.

Backed by the momentum, the Sensex is likely to target 17,000 this week. In case of a downside, the index is likely to find significant support around 15,800-16,000. This week, the Sensex may face resistance around 17,000-17,140-17,280, while on the downside, it is likely to find support around 16,125-15,990-15,850.

As against a 6 per cent gain on the Sensex, the Nifty zoomed 7 per cent (320 points) to 4,838. The NSE index moved in a range of 374 points and touched a lifetime high of 4,856.

The Nifty is close to its yearly (R3) resistance level of 4,866. Hence, some profit-taking at these levels cannot be ruled out. Further, the index has soared nearly 18 per cent (730 points) in the last five weeks.

The Nifty 9-day Relative Strength Index (RSI) is in overbought zone above 85 per cent. The slow stochastic is simply the normal stochastic smoothed via a moving average technique.

The slow stochastic indicator calculates the current price in relation to its period range (14 days). It is currently at 96 per cent, which indicates an overbought level. A value of more than 80 per cent is considered overbought, while a value of less than 25 per cent is oversold. This week, the index may face resistance around 4980-5025-5070, while on the downside, it is likely to find support around 4695-4650-4605.