After two weeks of gains, last week, the Sensex ended in the red on global worries. The index moved in a range of 1,303 points from a high of 10,571 to a low of 9,267, finally closing with a loss of 579 points at 9,385.
The Sensex began with a bang, rising by 572 points on Monday, but posting losses on the next three trading days — excluding Thursday, which was a holiday — as bears resurfaced.
In the preceding two weeks, the Sensex had gained a whopping 42 per cent (3,248 points) from a low of 7,697. At current levels, the index has depreciated over 14 per cent from its recent high.
Among the index stocks, Jaiprakash Associates slumped over 16 per cent. DLF and Tata Motors plunged around 14 per cent each, while ACC, Mahindra & Mahindra, Maruti, Larsen & Toubro, Bhel, Tata Steel, HDFC, ICICI Bank, Reliance Infrastructure, Sterlite, Wipro and HDFC Bank were down 7-12 per cent each. TCS and Tata Power, however, gained 1 per cent each last week.
Given the current market situation, the index is likely to drift lower at the start of the week and test its weekly and monthly support around the 8,600-level. A break of 8,600 would ensure us of a re-test of the recent lows.
The major bullish pivot remains at 12,100, above which one can expect a sharp pullback towards the 15,000-mark. This week, the index is likely to find support around 8,890-8,735-8,580 and face resistance around 9,880-10,035-10,195.
The NSE Nifty moved in a range of 382 points from a high of 3,161 to a low of 2,779 before settling with a loss of 163 points at 2,810. The index, too, just like the Sensex, witnessed resistance at the last week’s R2 level and then retraced sharply.
The higher support base mentioned last week at around 2,500 is likely to be tested this week. The bollinger bands are getting narrower, which suggest that the index may consolidate in a range of 2,550-3,350 before making the next big move on either side.
While the overall trend continues to remain southward, it seems the Nifty is likely to hit a temporary higher bottom around the 2,500-2,550 level on the back of multiple support indicators.
The mid-term (50-day) daily moving average (DMA) at 3,587 continues to remain above the short-term (20-day) DMA at 2,944, which is a negative sign.
This week, the index is likely to find support around 2,665-2,620-2,575, while it may face resistance around 2,955-3,000-3,050.
