Pull-back unsustainable

WEEKLY TECHNICAL ANALYSIS

While the global markets stabilised last week, our markets continued to witness considerable volatility, thanks to the Left/Congress stand-off over the nuclear deal.

The indices eventually managed to post gains after four weeks of losses. After having dropped over 9 per cent (1,424 points) in the preceding four weeks, the Sensex last week gained 2 per cent (283 points). The index swung in a wide range of 809 points. From a high of 14,680, the index dropped to a low of 13,871, only to bounce back and end at 14,425.

However, the pull-back was on low turnover (the daily traded average turnover for the last week dropped to Rs 4,343 crore on the BSE as against Rs 5,213 crore in the preceding week) and hence doesn't look convincing and may be unsustainable. On the positive side, the Sensex last week did not break its recent low of 13,780. If the index is able to cross 14,800 on the upside, the rally then may stretch up to 15,500.

This week, the index is likely to face resistance around 14,735-14,830-14,925, while support on the downside would be around 14,115-14,020-13,925.

The Nifty from a high of 4,263 touched early in the week tumbled to a low of 4,040 -- down 223 points. However, the index finally ended the week with a gain of 82 points at 4,190.

The short-term trend for the Nifty remains bearish as the index has closed below its short-term moving average, that is 20 days (4,309) and the short-term moving average is currently below the mid-term moving average, that is 50 days (4,358).

The long-term moving average, that is 200 days is currently at 4077.

The short-term trend for Nifty may change to positive as and when the index crosses 4315, above which, the index can rally up to 4530. A break of 4000-4030, in the near-term would trigger a fresh round of weakness.

This week, the index is likely to face resistance around 4275-4300-4330, while the support is around 4105-4080-4050.