Bias to remain positive above 17,630

The Sensex registered fresh five-month highs this week, and also ended higher for the fourth straight week. The BSE benchmark index touched a high of 17,972, pared some of the gains in the latter half of the week, and eventually ended with a gain of 92 points at 17,783.

In the process, the Sensex has rallied 5.6 per cent in the last four weeks, and is up 3.2 for the month so far.

The Foreign Institutional Investors (FIIs) continue to remain net buyers throughout the month, and so far have bought shares to the tune of Rs 6,580 crore. Their total investment for this calendar year so far has now reached to almost Rs 58,000 crore.

Among the Sensex stocks, Coal India Ltd surged nearly five per cent to Rs 367. Infosys Ltd, Tata Consultancy Services Ltd, Cipla Ltd, Hindustan Unilever Ltd, Wipro Ltd and Sterlite Industries Ltd were the other major gainers. On the other hand, Bharti Airtel Ltd shed 5.5 per cent at Rs 248. Reliance Industries Ltd, Hindalco Industries, Larsen and Toubro Ltd and Tata Steel Ltd were the other prominent losers.

As per the monthly Fibonacci chart, the Sensex has rallied past the R3 (Resistance 3) point and then retraced back. This indicates that the trend is likely to remain positive as long as the index sustains above the R1 level, which is 17,630.

To further support the positive bias, the Sensex by touching a high of 17,972, has also given a buy signal on the quarterly charts. Which now, indicates that the bias is likely to remain positive for this quarter as long as the index sustains above 17,430.

On the upside, sustained trade above 17,875, will strengthen the up move and the Sensex can then rally to 18,140-18,570 odd levels.

The NSE Nifty moved in a fairly narrow range for the second straight week, a range of 80-odd points this week followed by a range of 90-odd points last week. The index touched a high of 5,448, and a low of 5,368 before settling with a gain of 21 points at 5,387.

The Nifty has witnessed a ‘shooting star’ candlestick pattern on the weekly charts. A ‘shooting star’ pattern is normally bullish when appears at a high point in an uptrend. Hence, going ahead, this week low of 5,368 becomes very crucial for the index.

As long as the index sustains above 5,368, the Nifty can attempt to revisit 5,450-odd levels. However, sustained trade below 5,368, could see start of a correction with downside targets around 5,260-odd levels. The medium-term trend is likely to remain up as long as the index sustains above 5,260. Next week, the Nifty would look to seek support around 5,355-5,335, and face resistance around 5,415-5,435.