Crucial trading week ahead

The markets moved in a tight range last week. The Sensex started the week on a promising note, but soon lost way and dropped to a low of 19,147, only to bounce back strongly to a high of 19,640. The BSE benchmark index finally ended the week with a gain of 100 points at 19,496.

Index heavyweight ITC was the top gainer among the Sensex 30 stocks, up 5.5 per cent at Rs 342. Tata Motors also rallied over 5 per cent to Rs 296. Hindustan Unilever, Gail India, Jindal Steel, Sun Pharma, BHEL, Reliance and Cipla gained 2-4 per cent each. On the other hand, ONGC shed 4.5 per cent at Rs 315. Tata Steel, State Bank of India, HDFC, Bajaj Auto and Coal India declined 2-3 per cent each.

The BSE benchmark index is yet to give any indication on the monthly Fibonacci charts. The index has near resistance at 19,700, above which the index can spurt to 19,925.

Similarly, sustained trade below 19,400, can take the index to 19,090-odd levels on the downside. The index needs to breakout of this range for a directional move.

Next week, the Sensex may move in a range of 600-odd points. The BSE index is likely to seek support around 19,310-19,250-19,190, while it is likely to face resistance around 19,685-19,740-19,800.

The NSE Nifty edged 26 points higher for the week, even as the index gyrated in a broad range of 5,750-5,900. The NSE index finally ended at 5,868.

Next week could be a crucial trading week, in terms of determining the trend for the rest of the month.

Currently, the index seems trapped in a range of 5,750-5,900, with upside extension likely at 5,925-5,960-odd levels. On the downside, break of 5,750 can trigger a sharper fall to 5,650-odd levels.

Key momentum oscillators on the weekly charts - like the MACD (moving average convergence-divergence) and Stochastic Slow are still in favour of the bears. A positive close next week can give a solid fillip to the markets.

The price and moving averages remain positive for the Nifty on the weekly charts. The index needs to sustain above 5,900 for fresh strength to emerge. On the flipside, sustained trade below 5,830 can strengthen the bears.

To sum it up - it's like a must-win week for the bulls, as a positive close for the week can trigger more gains in the month. The Nifty has near resistance at 5,900. In case of weakness, the index may re-test 5,750-odd levels.