Keep an eye on 17,300 level

The markets ended the holiday-shortened week with a gain of 0.5 per cent, as investors cut down positions owing to the extended weekend factor. The Sensex touched a high of 17,664, but eventually ended the week with a gain of 82 points at 17,486.

Among the Sensex stocks, BHEL surged 6.5 per cent to Rs 274. State Bank of India, NTPC, Larsen & Toubro, Hindalco and ONGC were up two to three per cent each. On the other hand, Jindal Steel, Bajaj Auto, Hindustan Unilever, Maruti Suzuki, Hero MotoCorp and Bharti Airtel were prominent losers.

Going ahead, the earnings season, global factors and the Reserve Bank of India’s policy action are some of the key factors that are likely to weigh on market sentiments. Hence, one can expect higher volatility this month.

According to the monthly Fibonacci charts, the outlook for the markets is that of cautious optimism. The bias for the markets is likely to remain positive as long as the Sensex withholds 16,700-level on a closing basis, this month.

The weekly charts indicate that 17,300-level is the crucial level to keep an eye on. As long as the index stays above 17,300, there is a possibility of the Sensex attempting pull-back rallies from this point. However, break of 17,300 will open the doors for the next major support around 16,900 and eventually 16,700.

On the upside, the Sensex needs to sustain above 17,400, a break of 17,660 will see the index rally to 17,850 and 18,100-odd levels, which are major resistance levels for the index. The NSE Nifty moved in a 100-point range, from a low of 5,279, the index rallied to a high of 5,379, and finally settled with a gain of 27 points at 5,323.

Select momentum oscillators like the MACD and the Stochastic Slow have turned favourable for the daily charts. As long as the Nifty is able to sustain above 5,280, the index can rally to 5,450.

According to the weekly charts, the Nifty has considerable support around the 5,200-level. The MACD remains favourable on the weekly charts as well, while the Stochastic Slow seems to be on the verge of turning positive. Next week, the Nifty is likely to seek support around 5,285-5,260, and face resistance around 5,360-5,385.