The markets moved on expected lines. After a brief consolidation, the rally resumed and the indexes ended on a fairly firm note for the second week in a row.
Last week, I had mentioned that the markets may consolidate in the first half of the week, and then move up. Also, it was mentioned that the Sensex may rally and re-test its April high, ie the 18,000-mark, in June itself. Indeed, the current up-move seems to have legs to rise above the 18,000-mark. However, one needs to keep an eye on 16,800 for a reversal of the current up-trend. As and when the Sensex breaches 16,800, it would signal an end to the current up-move.
This week, the Sensex touched a low of 16,318, then rallied to a high of 17,150. The index finally settled with a gain of 255 points at 17,118. In the process, the index has gained 672 points in the last two weeks.
Considering the fact that the markets have bounced back from below its long-term (200-day) moving average, the bears may not make life all that easy for the bulls. Hence, expect some choppiness in the up-move. While the overall bias remains positive, there could be select days of extreme bear pressure.
Telecom major Reliance Communications was one of the major gainers among the Sensex stocks. It zoomed 14 per cent to Rs 168 and was followed by Maruti and Mahindra & Mahindra, with gains of nine per cent and 7.5 per cent respectively. Hindustan Unilever, Bharti Airtel, ONGC, Reliance Infrastructure and SBI gained five-seven per cent each.
On the other hand, Sterlite shed 5 per cent at Rs 649. Jindal Steel, Jaiprakash Associates, Tata Power and Tata Steel were the other major losers.
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Next week, the Sensex is likely to face resistance around 17,300, before advancing to 17,540. On the downside, the index is likely to find support around 16,800-16,700.
The NSE Nifty moved in a 187-point range. From a low of 4,961, the index surged to a high of 5,148. The Nifty finally ended with a gain of 69 points at 5,136.
The Nifty is likely to find considerable support around the 5,000 level, in case of a down-move. On the upside, expect some profit-taking to take place around 5,200. Overall, it seems a week where the Nifty could move in a range of 5,000-5,200.