Sensex support at 17000

WEEKLY TECHNICAL ANALYSIS

Volatility was the name of the game last week and is likely to continue for the week ahead. From euphoric highs, markets came crumbling down like a pack of cards. They recovered sharply, but eventually tumbled again.

The Sensex began the week with a bang (up 640 points) on Monday. Panic selling on Wednesday, owing to the Sebi's discussion paper on participatory notes, saw the index hit the lower circuit for the third time in the last three years. Certain clarifications, thereafter, saw the index recover and, in fact, the Sensex scaled a fresh all-time, intra-day high of 19,199, up 780 points for the week.

However, aggressive selling on Friday saw the index tumble to a low of 17,226, down 1,972 points from the peak. The Sensex finally ended the week with a loss of 4.7 per cent (859 points) at 17,560. The index has gained a whopping 30.2 per cent (4,228 points) in the previous eight weeks.

Last week, we had mentioned that while upside targets were difficult to set, one needed to keep a close eye on key support levels. The Sensex tested the support level of 17,300, bounced back sharply, but eventually broke it. Going forward, the index is likely to test the support of 17,000, below which the index may drop to 15,780.

The bias seems negative for the moment and any upmove is likely to face stiff resistance around 18,070-18,550 levels. This week, the index may face resistance around 18,300-18,550-18,780, while on the downside, the index may find support around 16,800-16,570-16,350.

The NSE Nifty moved in a wide range of 635 points. From a peak of 5,737, the index plunged to a low of 5,102, before settling with a loss of 3.9 per cent (213 points) at 5,215. The key level to watch out for the Nifty is 5,020, below which the index could drop to 4,780-4,600.

This week, the index is likely to face resistance around 5,455-5,530-5,610, while on the downside, the index may find support around 4,970-4,900-4,820.