Despite the overall negative bias, current pullback looks likely to continue. Although global situation will be closely watched, charts indicate any positive surprise could trigger a strong rally, which includes the possibility of the Sensex rallying past the April high in June. In other words, the index may surpass the 18,000-mark.
This week, markets exhibited high volatility and eventually ended with gains. The Sensex, after slipping to sub-16,000 levels, bounced back sharply, somewhat aided by short-covering and receding European debt fears. The index finally ended the week with a gain of 417 points at 16,863.
Among index stocks - Reliance Communications led the gainers, up 10.5 per cent at Rs 147. Jaiprakash Associates, Reliance Infrastructure, Sterlite, Tata Motors, TCS, DLF, ITC and Reliance rallied four-eight per cent. But, ACC plunged nearly four per cent to Rs 827. Tata Steel, Bharti Airtel, SBI and Maruti were the other prominent losers.
The NSE Nifty took support at 4,786, before settling with a gain of 135 points at 5,067. I had mentioned last week that weekly charts suggest support for the Nifty around 4,735. However, the index bounced back from a significantly higher level, and the expected bounce was 250-300 points.
Since the upmove has been steep, one can expect some consolidation in the first half of the week. However, it seems unlikely that there could be any major fall from current levels. The Sensex is likely to seek support around 16,650-16,500 and, in case of further weakness, the index may slip to 16,300. On the upside, the index is likely to regain the 17,000-mark, and may rise to 17,200-17,440.
The Nifty is likely to move between 4,955 and 5,175 next week. On the lower side, the index will find support around 4,980, while on the upside, the index may jump to 5,245.
