Last week, the Sensex swung in a range of 873 points. After a positive start, the index dropped to a low of 8,467 and then recovered again and rallied to a high of 9,341. The Sensex finally ended the week with a loss of 128 points at 8,965.
A lot would depend on the stimulus package, which the government is likely to announce over the weekend. Since the market has not done much, the trend, more or less, remains same — that is, the long-term negative trend with a possibility of a pull-back in the short term. Probably, the next week could give us a clearer picture of how the year would end. Today, we will look at the long-term picture as the price-wise correction is more or less over for the current leg of the downmove. The Sensex has depreciated around 63 per cent from its peak of 21,207 to a low of 7,697. However, time-wise the correction has been too swift and hence we should see some amount of consolidation before the next move, up or down.
Considering the fact that our bull market started on June 4, 2003, when the Sensex firmed up above the 200-DMA (daily moving average) and the run ended on May 7, 2008, after the index was unable to sustain above its long-term DMA(200 days), it gives us 1,240 days of bull-run.
| KEY LEVELS | ||
| Sensex | Nifty | |
| S3 | 8425 | 2550 |
| S2 | 8530 | 2585 |
| S1 | 8630 | 2615 |
| Close | 8965 | 2714 |
| R1 | 9300 | 2815 |
| R2 | 9400 | 2845 |
| R3 | 9500 | 2875 |
| S-Support level R-Resistance level | ||
As we calculate price-wise projections for the index based on the Fibonacci levels, we will do the same with number of days. Similarly, time-wise calculations give us the following results. Currently, we have seen 144 days of the bear market. A minimum retracement of 22 per cent gives us 273 days — that is the bear market may continue till at least the first or second week of July 2009. A more realistic retracement level — 38.2 per cent — would see the bear market end around the third or fourth week of April 2010. A bigger time-wise correction of 50 per cent and 61.8 per cent would mean the bear market ending around November 2010 and June 2011 respectively. Coming back to the markets next week, the Sensex is likely to face resistance around 9,300-9,400-9,500, while support on the downside could be around 8,630-8,530-,8425. The NSE Nifty moved in a range of 262 points. From a high of 2,833, the index slipped to a low of 2,571 and finally settled with a loss of 41 points at 2,714.
The bollinger bands on the chart have further narrowed down to 3,039-2,496 suggesting a tighter range before the break-out or break-down in either direction.
This week, the Nifty is likely to face resistance around 2,815-2,845-2,875, while support on the downside would be around 2,615-2,585-2,550.
