Key support at 5,200 level

The markets after a positive start to the week, collapsed towards the end amid rising geopolictical tensions especially in West Asia. The Sensex, from a high of 18,458, tumbled to a low of 17,470, down 987 points intra-week as Libyan tensions saw crude oil prices soar over $120 a barrel. Also the derivatives expiry and Budget related worries weighed on investor sentiment. The Sensex finally ended with a loss of 2.8 per cent (511 points) at 17,701.

Among the index stocks, Reliance Infrastructure surged 5.5 per cent to Rs 638. Reliance, Hero Honda and TCS were the other major gainers. On the other hand, Mahindra & Mahindra and DLF plunged nearly nine per cent each to Rs 595 and Rs 213, respectively. Tata Motors, Larsen & Toubro, Tata Power, Jaiprakash Associates, SBI, Reliance Communications, HDFC Bank, BHEL and Jindal Steel dropped 5-8 per cent each.

While the markets did not meet the higher end of the trading band mentioned last week, heavy selling pressure saw indexes fill the gaps created as per expectations. The markets are now at the lower end of the Bollinger Bands, and also close to their very recent lows of early February.

The NSE Nifty which moved in a 294 points range, from a high of 5,526 the index dropped to a low of 5,233, and finally settled with a loss of 155 points at 5,304.

The NSE Nifty is likely to get considerable support around the 5,200-level, its recent low stands at 5,178. As long as the index does not break 5,220, on a closing basis, one can expect a possible pull back towards the 5,600-odd levels.

On the flip side, break of 5,200-level could spark fresh trouble for the markets, and another 10-11 per cent fall could be possible wherein the Nifty drops to 4,700-odd levels.

The long-term trend remains bearish; however, possibility of some range-bound trading remains alive as long as the index holds 5,200. In the best case scenario, we could see the index move sideways in the 5,200-5,700 range for the next few weeks.

Among the Nifty 50 stocks - ITC, Powergrid, Reliance Capital and TCS are likely to trade with a positive bias, while Sterlite, HDFC Bank, HCL Technologies may trade with a negative bias.