Nifty in danger zone

WEEKLY TECHNICAL ANALYSIS

After showing signs of testing the 14,000 mark in the last week of the year, the Sensex fizzled out on account of derivatives expiry related pressure and profit booking.

The Sensex, which opened on a positive note, rallied to a high of 13,960 in the week, and finally settled at 13,787, up 315 points. In the process, the Sensex ended the month with a nominal gain of 91 points, while the gains for the whole year stood at an astounding 4389 points.

Similarly, the Nifty came tantalising close to the 4000 mark, as it touched a high of 3997, before settling at 3966 "" up 95 points. The index gained 12 points in the month while it surged 1130 points in 2006.

Going forward, the 3870-3880 level needs to be watched carefully, as the short-term (15 days) and mid-term (45 days) averages are converging at these levels. In fact, the short-term average (3877) has just dipped below the mid-term average (3879), which is a sign of weakness.

The Nifty is likely to face resistance around 4015-4030-4045 levels, while the support on the downside is likely to come around 3920-3900-3890 levels.

The broader picture suggests that the Nifty is likely to move in a broad range of 3725-4200 in January. The yearly target for the index is 4500.

Infosys (Rs 2,240): The stock is likely to face stiff resistance around Rs 2,280-2,300. In case of a downside the stock may find support around Rs 2,200-2,180.

Reliance (Rs 1,270): The stock is likely to exhibit weakness in the early part of the week. The stock may drop to Rs 1,255-1,245, below which it may slip to Rs 1,205. On the upside, the stock is likely to face resistance around Rs 1,285-1,295.

Reliance Communications (Rs 471): Despite aggressive profit taking at the counter towards the end of the week, the stock managed to end with a marginal (Rs 3) gain at Rs 471. The stock is likely to take support in the range of Rs 457-462 while it may rally to Rs 480-485.