A rebound or a freefall?

WEEKLY TECHNICAL ANALYSIS

The markets continued to trend southwards for the third straight week. In addition to the Budget blues, a global market meltdown triggered heavy unwinding in the markets. Selling was seen across the board "� cement, banking and technology stocks led the dive.

The Sensex nose-dived to a low of 12,801 with an intra-week fall of 922 points, from a high of 13,723, touched early in the week.

The index eventually ended the week with a hefty loss of 5.5 per cent or 746 points at 12,886. In the process, it has shed a mammoth 11.4 per cent (1,653 points) in the last three weeks.

The Nifty, from a high of 3959, tumbled to a low of 3675 "� a swing of 284 points, before finishing at 3727, indicating a weekly loss of 212 points. The index has plunged 11 per cent (461 points) in the past three weeks.

Last week, we said the Sensex could drop to 12,635 levels in March. Now, the index is very close to that, and a drop below the level could see it fall off to a low of 11,800. Should the current freefall be arrested the index should not slump below 12,635 and should instead sustain above the 13,075 level in the coming days.

Both the key indices are currently in oversold zones and, hence, a possibility of a bounce-back is rather high.

The weekly support and resistance levels for the Sensex are 12,535-12,425-12,315 and 13,240-13,350-13,460, respectively. The corresponding crucial level for the Nifty is at 3630.

Weekly support for the index may emerge at 3620-3585-3550, while it is likely to face resistance at 3835-3870-3900.