5,600 level to be Nifty's pivot point

WEEKLY TECHNICAL ANALYSIS

The sharp rally on Friday helped markets end the week on a positive note. Earlier in the week, the Sensex had dropped 350 points to a low of 18,415. It, however, ended with a gain of 160 points (0.9 per cent) at 18,722.

Bharti Airtel surged five per cent to Rs 411. Tata Power, Infosys, Sterlite Industries, DLF, ITC and BHEL were the other major gainers. Tata Motors, however, slipped four per cent to Rs 997. NTPC, Wipro and Reliance Communications were the other prominent losers.

According to the monthly Fibonacci charts, the Sensex has not sent any signal. The charts indicate it will seek support around 18,500 levels, and on the upside sustain above 18,850. It may also re-test its monthly high. The weekly chart indicates some resistance around 18,904.

The Nifty moved in a 113 points range. From a high of 5,645, it slipped to a low of 5,533, ending with a gain of 53 points at 5,634.

For Nifty, the level of 5,600 should be seen as a pivot point. As long as it stays above 5,600, the bulls are likely to have the upper hand. On the upside, it may face stiff resistance around 5,700-odd levels. This because it coincides with the 50-week moving average (medium term) at 5,711, and the 200-day daily moving average (long term) at 5,718.

With two major events next week, the markets would be hoping for a positive surprise from either. On Monday, Reliance Industries is to announce its first quarter results, and the next day the Reserve Bank of India will announce its decision on key rates.

The daily charts for Nifty indicate a narrow trading band between 5,500 and 5,700. On the weekly charts, the momentum favours up move. Hence, an upside breakout seems more likely than a downside break. An upside breakout indicates a target at 5,900-odd levels.