Wkly Tech Analysis: Further strength likely above 5,570

The markets staged a strong comeback on the back of a populist Budget. The Sensex rallied 1,000 points during the week, from a low of 17,719 to a high of 18,737. The BSE benchmark index finally ended with a gain of 786 points at 18,487.

Among the index stocks, Mahindra & Mahindra zoomed nearly 14 per cent to Rs 676. Maruti and ITC also soared over 10 per cent each. HDFC, HDFC Bank, Bajaj Auto, Reliance Communications, Larsen & Toubro, Tata Motors, BHEL, Jaiprakash Associates, NTPC, Jindal Steel and Hindalco gained 5-9 per cent each. Reliance Infrastructure down 5 per cent was the only major loser.

The strong start to March indicates that the markets are likely to go further higher, and may surprise many of us on the higher end. However, for the up move to continue, the Sensex needs to sustain above key support levels of 18,350-18,130. As long as the index trades above them, one can assume that the up move is intact.

Significant targets for the Sensex on the upside would be around 19,150-19,300. In an extreme case, the index can also flare up to 19,700.

The NSE Nifty moved in a range of 300 points. From a low of 5,309, the index rallied to a high of 5,608. The index eventually ended with a gain of 235 points at 5,539.

For further bullishness, the index needs to cross 5,570 on a closing basis. The Nifty index may soon test its 200-DMA (Daily Moving Average), which is currently around 5,654. A breach of the same could lead to an accelerated up move of another 100-200 points. On the downside, the Nifty has made a strong base around 5,400, and the trend will remain up as long as 5,400 is not taken out on a closing basis.

This week, the Nifty is likely to find considerable support around 5,425-5,350. On the upside, the index will face resistance around 5,650-5,725.

Among the sectoral indices, the Bank Nifty too has moved more or less in tune with the benchmark indices. The index is currently testing its 200-DMA around 11,030-odd levels. Once above 11,300, the index could see a flare-up towards the 12,000 mark.