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| Old highs may be tested |
| Rex Cano / Mumbai Jan 03, 2010, 00:59 IST |
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The year 2009 ended on a high note, with benchmark (BSE & NSE) indices registering best yearly gains in the last two decades and touching fresh 19-month peaks. The year, however, will be most remembered for the Sensex and the Nifty hitting the upper circuit for the first time.
In the week under review, the markets surprisingly moved in an extremely narrow band despite the two holidays and the derivatives expiry. The BSE benchmark index, the Sensex, moved in a narrow range of 200-odd points. The index touched a high of 17,531 and settled with a gain of 104 points at 17,465.
Among index stocks, Reliance Infrastructure surged over 4 per cent. NTPC, Grasim, Bharti Airtel, SBI, Hindalco and Jaiprakash Associates were the other major gainers. Sun Pharma dropped 3.6 per cent. DLF, Wipro and ITC were some of the other prominent losers.
Lack of momentum on the upside suggests the up move may halt temporarily. The Sensex needs to sustain above 17,550 for further gains, while on the downside, the index may seek support at 17,385-17,335, below which the bears are likely to have the upper hand.
The longer-term picture, since we are at the start of the New Year, looks quite promising. Chances are that we may re-test the 21,000-mark this calendar year, while there are multiple strong supports for the index on the downside. The bias will remain bullish as long as the index remains above 13,840 this year. There is a further deeper support around 11,590 in case of extreme bearishness. On the positive front, the Sensex is first likely to target 19,550, followed by 21,090, in 2010.
The Nifty moved in a range of 62 points and ended with a gain of 23 points at 5,201. Last week, I had mentioned that the Nifty needed to sustain above 5,210 for fresh bullishness. As we see, the index was unable to close above 5,210 on any single day. Currently, the chart suggests that the Nifty needs to close above 5,237 for fresh bullishness. The Nifty may face resistance around 5,225-5,240 and find support around 5,177-5,163. A dip below 5,163 could see the index fall to 5,100 and then further lower to 5,010.
Unlike the Sensex, the yearly Nifty chart reveals that it will be difficult for the index to attain its 2008 peak (6,357) this year. In fact, the index has strong resistance around 6,225. The first significant target for the index is 5,790. On the downside, the index is likely to find considerable support around 4,600 and further lower at 4,175.
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