Key support of Sensex at 8,435 level in March

Last week, the markets ended with marginal gains despite a lot of negative global cues. The Sensex found support around January’s low of 8,632, before ending the week with a marginal gain of 48 points at 8,892.

Among the index stocks, Tata Motors, Mahindra & Mahindra and Maruti soared 7-12 per cent each. Infosys, NTPC, ONGC, Tata Steel, Bhel, HDFC Bank, Grasim and Hindustan Unilever gained 2-5 per cent each.

On the other hand, Ranbaxy slumped nearly 22 per cent to Rs 162. Other losers included HDFC, Wipro, ACC, ICICI Bank, DLF, Hindalco, SBI and Larsen & Toubro, which shed 2-6 per cent each.

Despite last week’s gains, the Sensex ended lower for the second straight month in 2009 — down 5.7 per cent (533 points). The benchmark has declined nearly 8 per cent so far this year. Similarly, the index is down 58 per cent from its intra-day peak of 21, 207 touched last year.

Last year’s intra-day low was 7,697, while this year the charts do suggest that new lows might be recorded. Currently, the market bias seems negative and the possibility of the index testing new lows could be very near. However, the Sensex is still above its crucial quarterly support level of 8,435.

As long as the index remains above 8,435 in March, the bulls can hope for some revival. However, once the support level is broken, then the index may see a steep fall towards the 7,550 levels.

In March, the benchmark will find support at 8,470-8,205, and resistance around 9,315-9,575 in the broader range. This week, the index may face resistance around 9,035-9,125, while finding support at 8,745-8,655.

The National Stock Exchange’s Nifty moved in an extremely narrow range of 120 points, from a high of 2,798, the index slipped to a low of 2,678, and finally ended with a gain of 27 points at 2,764.

The bollinger bands are moving in an extremely narrow range of 274 points (2,959-2,685).