Expect strong support at 4,814

The markets cracked in the latter half of the holiday-shortened week as global worries along with some domestic issues weighed on the investor sentiment. The Sensex had barely managed to cross the 17,000-mark, (weekly high 17,004) on Wednesday, but tumbled thereafter.

The index plunged to a low of 16,142, thereby breaking its gap-up support around 16,400-odd levels. The BSE benchmark index finally ended with a loss of nearly four per cent or 647 points at 16,200.

Among the index stocks, Bharti Airtel was the major loser down nearly eight per cent at Rs 360. Sterlite, ICICI Bank and Reliance were also down around seven per cent each. BHEL, Larsen & Toubro, Mahindra & Mahindra, Jaiprakash Associates, Coal India and Tata Steel were the other major losers. Wipro, however, managed to gain over two per cent at Rs 403.

According to the Fibonacci monthly charts, the Sensex has given a buy signal for the month. However, the condition remains that the index should not trip below 16,120. In case, the index slips below 16,120 then there is a strong possibility of the index falling all-the-way to 15,275 levels.

Currently, the markets are tantalisingly poised with more than one key level to watch out for. According to the quarterly charts, the index is likely to get considerable support around 15,700. And, as and when the index stabilises above 16,450-level, we could see a strong counter-rally by the bulls towards the 18,000-mark, albeit some hurdle around 17,200-odd levels.

The NSE Nifty moved in a range of 214 points, the index from a high of 5,055, tumbled to a low of 4,842. The index finally ended with a loss of 183 points at 4,867.

We have seen a perfect retracement action on the Nifty daily charts. At first, the index retraced exactly 61.8 per cent for the previous fall from 5,400 to 4,640, when the index touched a high of 5,099. The index, thereafter, has now little over 50 per cent of the recent up move from 4,640 to 5,099.

To sum it up, the Nifty is now likely to get considerable support around its 61.8 per cent retracement level, which is 4,814. As long as the index is able to sustain above 4,840, we could be in for a second leg of an up move, with upside targets of 5,100-5,200.