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Wkly Tech Analysis: Nifty losing momentum on daily charts

Among the Sensex 30 stocks, SBI and Hindalco soared around 6.5% each to Rs 2,311 and Rs 124, respectively

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The markets exhibited this week as it edged to fresh 19-month highs. The moved in a narrow band of 375-odd points, wherein the benchmark index recorded an intra-week high of 19,561, and finally ended with a marginal gain of 84 points at 19,424.

Among the Sensex 30 stocks, and soared around 6.5 per cent each to Rs 2,311 and Rs 124, respectively. surged over five per cent to Rs 834. BHEL, Sterlite Industries, and Tata Motors were the other major gainers. On the other hand, Infosys plunged nearly five per cent to Rs 2,320. Bharti Airtel too, tumbled over four per cent to Rs 323. TCS and Wipro were the other significant losers.

According to the monthly Fibonacci charts, the Sensex so far has not given any clear indication. The two pivot points to watch out for are 19,585 on the upside, above which a buy call can be triggered and 19,100 on the downside, below which the markets can weaken.

The quarterly charts too, indicate a crucial hurdle, as explained last week, at around 19,630. Unless the index sustains above 19,630, profit-taking from current levels cannot be ruled out. The near support level, according to the quarterly charts, is 19,260 - below which we can witness considerable selling pressure.

The NSE moved in a range of 110 points, the index after a steady first half of the week, slipped to a low of 5,839, and then bounced back sharply to register a high of 5,950. The Nifty finally finished off the week with a gain of 27 points at 5,907.

Last week, we had said the monthly charts indicate resistance for the Nifty at around 5,950. So far, it seems like the hurdle remains intact. Give or take another 30 odd points, the NSE Nifty is likely to face considerable resistance at around 5,980-odd levels. One should watch these levels very closely.

Select momentum oscillators on the daily charts - like the 14-day relative strength index (RSI) and the stochastic slow have already given negative divergence. Hence, any upside from current levels in the short term would be difficult to sustain.

According to the daily charts, the Nifty has near support around 5,835, below which the index can drop to the next crucial support at around 5,730. Failure to sustain above 5,730 can lead to severe unwinding.

The medium-term trend, based on the weekly price-to-moving averages action seems to remain in favour of the bulls. However, in the short term, the index needs to sustain above 5,880 for further gains. Or else, we could see a correction to 5,700-odd levels.

To sum up, the Nifty is likely to face considerable resistance at around 5,950-5,980. And 5,880 seems to be the pivot point for now. Sustained trade below 5,880 can see the index slip to 5,835, or deeper down to 5,730-odd levels.

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