The Sensex recovered smartly from an early week low of 15,136 and rallied to a high of 15,911, up 775 points. The BSE benchmark index finally ended with a gain of 272 points at 15,739.
Among the index stocks, Tata Motors and ICICI Bank soared seven per cent each to Rs 185 and Rs 722, respectively. Mahindra & Mahindra, Hindustan Unilever, HDFC Bank, HDFC and ONGC were up five per cent each. On the other hand, Jaiprakash Associates plunged nine per cent to Rs 53.65. Larsen & Toubro, Jindal Steel and Tata Steel were down four-six per cent each.
The monthly Fibonacci charts indicate the Sensex has given, both, a buy and a sell signal. Going forward, one needs to watch the 15,600-level keenly, as this could act as a pivotal point for determining the trend. The bias is likely to be cautiously optimistic, as long as the index is able to sustain above 15,600.
We are most likely to end the year with significant losses, as the index is down 23 per cent this year. It may be recalled, at the beginning of the year, I had warned 2011 could be a bad year if the first two months were adverse. (reference: http://business-standard.com/india/news/first-two-months-crucial-for-2011/420393/). I shall be updating the outlook for 2012 in the January 8, 2012 edition.
Back to the outlook for the next week, the NSE Nifty moved in a range of 232 points, from a low of 4,531, the index moved up to a high of 4,763 and finally settled with a loss of 62 points at 4,714.
On the charts, the upside seems limited, given the multiple headwinds ahead. The index is likely to witness resistance around 4,800-4,815, which happens to be the short-term moving average and 50 per cent retracement of the recent fall.
As we move higher, the Nifty is likely to face stiff resistance around 4,880-4,980, where the medium-term moving average and a sloping trend line from the previous two tops are overlapping.
On the positive front, the bias is likely to remain slightly positive, as long as it sustains above 4,600. Next week, it could seek support around 4,625-4,570, while facing resistance around 4,800-4,860.