Bears in driving seat below 13,900

The markets took a sharp dip last week following the Budget announcement. The Sensex, after touching a high of 15,098, tumbled to a low of 13,418, down 1,679 points. The index finally ended with a loss of 9.5 per cent (1,409 points) at 13,504.

Negative news flow outweighed the positives this week. Concerns over the deficient monsoon, global recovery and declining exports were some of the negative news. While, positive news such as Infosys results, IIP numbers and inflation were ignored by the market.

Among the index stocks - Reliance Infrastructure and Tata Steel — slumped around 20 per cent each to Rs 1,029 and Rs 353, respectively. DLF, Reliance Communications, ICICI Bank, Larsen & Toubro, HDFC and SBI dropped by 15-17 per cent. On the other hand, ITC surged nearly 10 per cent to Rs 211. Hero Honda and Maruti too ended with decent gains.

The broader range for the market could be around 12,600-16,500. It seems like the index is on its way to test the lower end of the range.

In the coming week, the market may move in the range of 12,600-13,900, with some support around 13,200. Bears will continue to hold an upper hand as long as the index stays below 13,900 this week.

The NSE Nifty moved in a range of 503 points, from a high of 4,480 to a low of 3,977, before settling with a loss of 9.5 per cent at 4,004.

Some of the key indicators such as - the MACD, ROC and Stochastic Slow are in the oversold zone, indicating some kind of a pullback in the very near term. In order to arrest the current downturn, the index needs to cross the 4,250-level as soon as possible.

This week, the index may face resistance around 4,195-4,255-4,315, while support around 3,810-3,750-3,690.