Further strength above 5300

The markets moved from strength to strength for most part of the week before witnessing some profit-taking on Friday. The fact that the Sensex was able to cross 17,300 with ease signals more hope for the bulls. The 17,300-level can now be watched as a support for the current upmove. On the upside, the index is likely to target 18,000-18,300 in the coming sessions.

This week, the Sensex finished with a gain of 506 points to 17,571. DLF led the gainers, up nearly 8 per cent at Rs 282. Larsen & Toubro, Reliance Communications and Sterlite rallied 7 per cent each. Infosys, Jindal Steel, ITC, Jaiprakash Associates, Tata Motors and HDFC were the other major gainers. Bharti Airtel, however, shed 3.5 per cent to Rs 265.

Next week, the Sensex is likely to face resistance around 17,800-17,870-17,945. On the downside, the index is likely to seek support around 17,340-17,270-17,195. Daily charts indicate near support around 17,480 (20-day daily moving average) and far off support around 17,021 on the weekly charts.

The NSE Nifty moved in a range of 182 points. From a low of 5,120, the index rallied to a high of 5,302, and finally settled with a gain of 143 points at 5,263.

Given the recovery in the world markets and renewed optimism among global investors, the bias continues to be positive. However, one needs to watch out for negative surprises in the form of either a surprise RBI rate action or poor monsoon for a change in bias.

The Nifty has been treading higher with support along its short-term (20-days DMA, or daily moving average), which is currently at 5,238. If the index breaks it, it could probably test its next significant support around 5,183. On the upside, the Nifty needs to close above the 5,300-mark for further strength.

From a medium-term perspective, the Nifty has considerable support around 5,100, and the upside target could be close to 5,400.