After five days of relentless selling, any hopes of a change in fortunes yesterday were dismissed early in the morning, as bears took grip of the markets. Aggressive selling in auto, banking, metal and realty stocks saw the markets break one support level after another during the course of the day.
The NSE Nifty tumbled to a low of 4,833, and finally settled with a loss of 155 points at 4,853.
With three successive close below its short- and medium-term moving averages, the Nifty is now all set to test its long-term (200-day Daily Moving Average) moving average at 4,600. With tomorrow being the expiry day for derivatives of January series, some bounce back in select stocks cannot be ruled out.
Daily fibonacci retracement levels, suggest support for the Nifty at 4,785-4,765-4,745, while resistance at 4,920-4,940-4,960. Not to forget, the major trend remains down as long as the index stays below its short- and medium-term moving averages of 5,115 and 5,190, respectively. The major breakout (Nifty crossing the 200-day DMA) which took place in mid-April 2009 will be under test during the next few trading sessions.
The Sensex slumped nearly 500 points, and ended at 16,290. The index is now close to its third crucial quarterly support of 16,100. A breach of which, could mean that the markets may remain weak till March as long as the index stays below 16,100. Below, 16,100 the index is likely to test its yearly support level of 15,380, which happens to almost coincide with the 200-day DMA at 15,330, hence can be seen as a major support.
One can expect two-way swing in certain stocks today owing to the derivatives expiry.
To read more on stocks visit smartinvestor.in: Long term support within sight
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