The Sensex ended at a fresh 13-month high as world markets cheered the positive news flow from the US. The Federal Reserve, on Thursday, announced the QE3 (quantitative easing) measures, wherein the US government will continue to buy mortgage-backed securities worth $50 billion a month till the economy revives.
Back home, the government, by announcing a diesel price hike, followed by the approval for foreign direct investment in the retail and aviation sectors has finally kicked-off the long stalled reform process.
The BSE benchmark index ended with a solid gain of four per cent at 18,464. In the process, the Sensex also ended higher for the second straight week, gaining as much as six per cent in the last two weeks.
Going ahead, the Reserve Bank of India’s mid-term policy review on September 17, advance tax numbers and political news flow will dictate terms to the market.
Among the Sensex stocks, Hindalco Industries and Tata Motors zoomed over 10 per cent each to Rs 118 and Rs 270, respectively. Larsen and Toubro, Tata Steel, ICICI Bank, Coal India, Reliance Industries and Jindal Steel were the other major gainers, up six-eight per cent each. On the other hand, Cipla dropped 5.5 per cent to Rs 369. NTPC, down two per cent, was the only other loser.
As per the monthly Fibonacci chart, the Sensex has given a strong buy signal. The bias is likely to remain bullish as long as the index sustains above the 18,000-mark for the rest of the month. On the upside, the index can target 18,800-odd levels as per the quarterly charts.
Next week, the Sensex is likely to seek support at around 18,150-18,050-17,955, while face resistance around 18,775-18,875-18,975.
The NSE Nifty moved in a range of 255 points. The index from a low of 5,332, rallied to a high of 5,586. The NSE index finally settled with a gain of over four per cent at 5,578.
The index has now ended in the positive territory for the last eight straight trading sessions, hence, looks slightly overbought on the daily charts. The key level to watch on the daily charts is 5,520, below which we could see a short-term correction.
The weekly and monthly charts continue to remain in favour of the bulls, and hence any correction should be looked as an opportunity to enter the markets. The weekly charts indicate bullish bias for the index above 5,550, below which the index can dip to 5,400-odd levels. The monthly charts indicate a target of 5,900-odd level.
The momentum is strongly in favour of the bulls on the weekly charts. The price-to-moving averages action, the MACD and RSI all indicate continuation of the upward trend. Only if the Nifty trades consistently below 5,550, one should need to worry.
Next week, the Nifty can seek support around 5,480-5,450-5,420, while face resistance around 5,675-5,705-5,735.
