The negative divergences seen last week played on as the markets broke their five-week winning streak this week due to selective profit-taking. The Sensex soared to a fresh 33-month at 20,707, and then slipped to a low of 20,146, before settling with a loss of 195 points at 20,250.
Among index stocks, Reliance Communications soared over seven per cent to Rs 180. Jaiprakash Associates, Hindalco, Reliance and Cipla were the other major gainers. Tata Steel slumped over six per cent to Rs 627. Hindustan Unilever, HDFC Bank, Bharti Airtel, ITC, HDFC and ONGC were the other major losers.
According to the fibonacci calculations, the markets have given a positive break on the upside. However, the positive bias shall continue only if the index is able to stay above its key support zone — 20,030-20,070. One can look for strong support and a possible turnaround from this support zone.
On the flip side, if this support zone is violated, we could see a further dip of 500-700 points. The NSE Nifty moved in a range of 156 points. From a high of 6,223, the index dropped to a low of 6,067, and settled with a loss of 40 points at 6103.
Technically, there are no clear signals as of now. The MACD has turned negative, while the Stochastic Slow indicator favours the bears. However, going by the moving averages indicator, one can look forward to strong support for the Nifty around 6,000 and resistance on the upside around 6,200.
Next week, the index may face resistance around 6,165-6,180-6,200 and seek support around 6,045-6,025-6,005.
