For a consecutive week, the Sensex managed support at the monthly Fibonacci support level of about 18,220. The recovery was fairly swift towards the end of the week. From a low of 18,256, it scaled a high of 18,568, settling at 18,507, a rise of about 200 points.
Mahindra & Mahindra was the major gainer among Sensex 30 stocks. The stock soared about seven per cent to Rs 954. ITC and HDFC Bank rallied four per cent each to Rs 286 and Rs 670, respectively. Sun Pharma, Maruti Suzuki and Tata Power were other major gainers. NTPC plunged four per cent to Rs 160. BHEL, GAIL, ONGC, Tata Motors, Tata Steel and Dr Reddy's were other prominent losers.
The Sensex has not just bounced back from 18,220-odd support levels; it has also turned positive on a monthly basis. Therefore, now, the key support would be at 18,350-odd. As long as the BSE benchmark index sustains above this, the index can rally to 18,750-odd.
The NSE Nifty moved in a range of about 95 points. From a low of 5,548, it rallied to a high of 5,643, ending at 5,627, a gain of 53 points. There seems to be lack of clarity on the Nifty charts. In other words, the index seems at a crossroads, with momentum oscillators equally split in favour of the bulls and the bears.
On the daily charts, the moving average convergence/divergence and the Stochastic Slow are in favour of bulls, while both indicators favour bears on the weekly charts.
The short-term trend is on the verge of turning negative on the daily charts, with the short-term (20-day daily moving average) on the verge of slipping below the medium-term (50-day daily moving average). The moving average scenario remains comfortably in favour of the bulls.
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One can expect high volatility in the holiday-shortened derivatives expiry week. The markets would be shut on Wednesday, on the occasion of Guru Nanak Jayanti.
The trading range for the Nifty seems to be 5,565-5,685. However, given the expectations of high volatility, it would be advisable to avoid shorting above 5,685-odd levels and buying below levels of about 5,565.