Nifty close to key support area

WEEKLY TECHNICAL ANALYSIS

The markets exhibited high volatility last week. After a strong start, the major indices witnessed significant correction, only to bounce back and cut losses at the end of the week.

The Sensex rallied to an intra-week high of 15,569, up 333 points from the previous week's close. However, a mid-week correction, amid global markets meltdown, saw the index tumbling to a low of 14,896, down 672 points from the week's high. The Sensex recovered some of its lost ground and ended at 15,138, down 96 points for the week.

Last week, we had mentioned that the Sensex may test its near-term support of 14,935. As against our support level, the index made a low of 14,896. The pullback, as it has been on low volumes, looks unconvincing.

Looking ahead, the 14,650-14,800 range will be the key support zone for the Sensex this month. Breaking of this support zone can see the index slipping another 1,000 points to its major support level of 13,800.

This week, the index is likely to face resistance in the range of 15,400-15,550, while on the downside the index may find support around 14,880-14,720.

If the Sensex manages to take out 15,550 on the upside, it will be possible for the index to target 16,000 or so in the near term.

The Nifty moved in a range of 207 points, from a high of 4,534, the index slipped to a low of 4,327, before bouncing back to end at 4,402 "" still down 44 points.

The short-term trend for the Nifty will remain down as long as the index remains below 4,530-level. This week, the index may face resistance around 4,480-4,530, while in case of a downward move, the index is likely to find support around 4,320-4,275 (mentioned last week as well), which is a very strong support zone for the index.