Consolidation seen around current levels

The markets once again moved on expected lines, as the Sensex took support at 17,385 and then bounced back. There was some volatility due to the European crisis following S&P’s downgrades and derivatives expiry. The Sensex eventually closed the week with a loss of 135 points at 17,559.

Among index stocks — Sterlite, HDFC and ONGC surged around 4 per cent to Rs 828, Rs 2,821 and Rs 1,055, respectively. Tata Motors, HDFC Bank and SBI rallied 2-3 per cent. On the other hand, Sun Pharma slumped 7 per cent to Rs 1,567. Jaiprakash Associates, DLF, Maruti, Reliance, Tata Steel and Grasim plunged 4-6 per cent each.

Last week, it was mentioned that the markets would continue to trade with a positive bias as long as the recent low of 17,275 held. We continue to maintain the view and we may see the markets testing the higher end of the 17,850-18,050 band. The Sensex may consolidate around 17,675 for a couple of days before attempting an upmove. The 17,675 level is the short-term (20-days) moving average of the index.

The NSE Nifty moved in a range of 140 points, from a low of 5,202, the index rallied to a high of 5,342 and finally settled 26 points lower at 5,278.