Bears were caught on the wrong foot, as the suspected downmove reversed sharply on positive economic developments. Last week, I had mentioned the downmove looked suspect because of the low volumes. The upmove has been quite sharp and the indices managed to record new 15-month highs on Thursday, the last trading day for the week. Next week is also a curtailed one with just three trading days, as the exchanges have declared holidays on Monday and Friday.
After struggling for nearly four months, around the 5,181 level, the Nifty finally overcame it on Thursday, backed by fresh foreign institutional investor (FII) buying. Early in the week, the index dropped to a low of 4,944, but ended up 3.82 per cent at 5,178 at the close of the week. The index, though registered a fresh high of 5,198, but is still not out of the rangebound zone. For the bullish momentum to continue, the Nifty needs to close above 5,210 for a couple of days. A break above 5,210 could see the index rally up to 5,340.
The weekly support level will be around 5,080-5,050-5,020, and resistance at 5,275-5,305-5,335.
The Sensex moved in a range of 582 points, from a low of 16,693, the index touched a high of 17,414. It finally settled with a gain of 3.83 per cent (641 points) at 17,361. Among the index stocks — NTPC soared 11 per cent to Rs 230. Hindalco surged 10.5 per cent and Tata Steel added 9.3 per cent. Reliance Infra, ICICI Bank, Tata Motors, Reliance and Sterlite were up 5-7 per cent each.
The Sensex is likely to face resistance around 17,680-17,780-17,880 and support around 17,040-16,940-16,840.
