<b>Weekly Tech Analysis</b>: Stiff resistance ahead

The markets continued to rally for the sixth straight week backed by steady corporate earnings and firm global markets. The Sensex, which gained 293 points last week to end at a record 15,565, soared 10.7 per cent (1,501 points) in the last six weeks.

Last week, the buying momentum saw the Sensex rally to a fresh all-time intra-day high of 15,683, up 523 points from the intra-week low of 15,160. Oil & gas, telecom, metal and banking stocks were the prominent gainers.

Despite the near 300-point rally, the market breadth was negative last week and is an indication of a possible correction ahead. The 14-day RSI (relative strength index) for both the Sensex and the Nifty is in overbought zone, and is also a cause for concern.

The Sensex is likely to face stiff resistance around the 15,780-level, for it is the resistance level on the weekly, quarterly and yearly chart. Above 15,780, the index may rally to 16,000. On the downside, the index has the potential to drop to 15,100.

The futures and options expiry for the July series, coupled with the ongoing earnings season, is likely to add  to the market volatility.

The Nifty touched an all-time high of 4,601, before settling with a gain of 61 points at 4,566. The index is likely to counter stiff resistance around 4,620 levels, while on the downside the index may find support around 4,480-4,510.

Among other indices, the CNX 100 and CNXIT indices, too, moved on expected lines. The CNX 100 index is expected to take a temporary halt around the 4,530-mark, also mentioned last week. The index touched a high of 4,517, and finished with a gain of 48 points at 4,481. The index may find support around 4,395-4,425, below which the index may tumble to 4,250.

The CNXIT index is likely to find support around the 5,160 level, on the upside the index may rally up to 5,300.