The markets last week broke its three week down trend as the major indices found some support around the long-term (200-day) daily moving averages (DMA). The daily indicators have turned somewhat positive, however, the medium-term picture looks bleak hence any recovery from current levels could be short-lived, and we may end the week with net losses.
The Sensex touched a low of 15,652, which is also now its 200-day DMA. A break of the long term support is certainly going to ring alarm bells, as it opens the possibility of the index tumbling to sub 13,000-levels.
As mentioned in our daily technical view as well, the current trend will remain weak as long as the Sensex stays below 16,600. So watch out for resistance around these levels.
This week, the Sensex ended with a gain of 237 points at 16,153, reversing its three week downtrend wherein the index had shed 1,639 points. Among the index 30 stocks - Hero Honda soared nearly 7% to Rs 1,690. Grasim, Bharti Airtel, Infosys, ACC, Jaiprakash Associates, ICICI Bank and Reliance Communications moved up 3-5% each. On the other hand, Tata Steel shed 4.5% at Rs 534. Tata Power, DLF and Hindalco declined 2-3% each.
Next week, the Sensex is likely to face resistance around 16,360-16,430-16,495, while seek support around 15,940-15,880-15,810.
The Nifty moved in a range of 259 points, the index touched a low of 4,692 and then recovered to a high of 4,951. The index settled with a gain of 70 points at 4,827.
The Nifty long-term moving average is at 4,685, the medium-term (50-days) moving average is at 5,064, and the short-term (20-days) moving average is at 4,942.
The corresponding crucial resistance for the Nifty is at 4,940. Next week, the index is likely to face resistance around 4,890-4,910-4,930, and seek support around 4,790-4,740-4,720.