Markets gained for the second week in a row, backed by positive sentiments on hopes of a speedy global economic recovery, higher advance tax numbers and fund buying. The Sensex ended the week with a gain of 2.93 per cent at 16,741.
The index began the week on a subdued note, but later picked momentum and rallied to a 16-month high of 16,820. The index has gained over 1,000 points in the last two weeks.
Among the index stocks — Jaiprakash Associates soared 12.6 per cent to Rs 257. Maruti, SBI, Hindalco, Tata Steel, ACC, Tata Motors and Mahindra & Mahindra surged 8-12 per cent each.
The Sensex hit resistance at 16,800 and consolidated later. Going forward, its strength above 16,800 could see the index rally up to 18,000. At the same time, one should keep an eye at the 16,480 level for any sign of a trend reversal. On breaching 16,480, the index may slip to 16,170. There could be significant unwinding afterwards.
The NSE Nifty crossed the 5,000-mark in intra-day trades after a long gap of 16 months. The index, however, could not sustain above this mark for long owing to some profit booking. The index finally closed the week with a gain of 3.03 per cent (147 points) at 4,976.
Next week, the Nifty may target 5,110 on the upside, with some resistance around 5,060. On the downside, the index is likely to find support around 4,895 and further down at 4,840.
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The upmove for the Nifty from current levels seems limited to around 5,100-5,360 levels. Although, quite a few key technical indicators — Moving Average Convergence/ Divergence (MACD), Relative Strength Index (RSI) and Stochastic Oscillator Slow are in overbought zones, there are no sell signals. Hence, the market may move sideways at higher levels till there comes a clear directional move.
Significant correction in the Nifty, could see the index drop to 4,760 (20-day daily moving average) and 4,525 (50-day daily moving average).