The markets moved in a tighter range compared to the previous week, and more importantly ended in red owing to weakness in the latter half of the trading week. The Sensex had started the week on a shaky note, but soon firmed up and raised hopes of a year-end rally even as the central bank did not oblige with any rate cut in the policy review on December 18. The BSE benchmark index, Sensex, bounced back sharply from the intra-week low of 19,149, and rallied to a high of 19,521. However, the Sensex could not sustain gains and eventually slipped back into the negative terrain as fears of US fiscal cliff re-surfaced. The Sensex finally ended with a loss of 75 points at 19,242.
Among the Sensex 30 stocks, Tata Steel and Hindalco soared around eight per cent each to Rs 430 and Rs 129, respectively. Jindal Steel surged 5.5 per cent to Rs 454. Cipla, Sterlite Industries and Tata Motors were the other major gainers. On the other hand, Larsen & Toubro, HDFC and ITC shed around three per cent each to Rs 1,589, Rs 828 and Rs 288, respectively. Reliance Industries, HDFC Bank and Bharti Airtel were the other major losers. According to the monthly Fibonacci charts, the Sensex failed to test the monthly resistance of 19,585, and on the downside has still managed to survive above its near support of 18,900. Going ahead, the index would look to seek support around 19,100 or lower down at 18,900.
In case the Sensex is able to break above 19,585, then we could see a sharp rally to 19,800 and 20,000-odd levels. On the other hand, break of 18,900 can trigger a fall to 18,650-odd levels.
The NSE Nifty moved in a range of 116 points, the index from a low of 5,823, bounced back to a high of 5,939, before settling with a loss of 32 points at 5,848.
The Nifty showed glimmers of hope for a year-end rally, as the index bounced back after discounting a status quo policy by RBI. However, the index which weakened in the latter half of the week, now threatens to test support around 5,750-odd levels. According to the daily charts, the Nifty has slipped below its short-term (20-day) daily moving average. Select key momentum oscillators like the moving average convergence/divergence (MACD), 14-day relative strength index (RSI) and the Stochastic Slow have also shown negative divergence. Hence, weakness in the early week seems likely.
On the other hand, the momentum oscillators remain in favour of the bulls on the weekly charts. Hence, a sharp pull-back from 5,750 or 5,700-odd levels cannot be ruled out. In case of recovery, the index would have to sustain above 5,775. To sum up - expect some or considerable weakness in the first half of the week. Keep an eye on 5,700-5,750 range for support to the Nifty. The corresponding key levels would be around 18,900-odd for the Sensex. On its way up, the Nifty will have to sustain above 5,775, and then a counter rally towards the end of the week may unfold.