March expiry to cushion fall

After a tentative start to the week, the markets steadily moved higher on the back of foreign institutional investor (FII) inflows and lack of negative news flow. The Sensex took support at 17,061 as mentioned last week, and then moved up to a high of 17,601. The index finally ended the week with a gain of 412 points at 17,578. In the process, not only did the markets turn positive, but also extended its winning run to the sixth straight week. It has rallied 9 per cent (1,426 points) in the same period.

Index heavyweight Reliance Industries was the major mover this week. The stock surged 6.7 per cent to Rs 1,090. Reliance Communications and Hindalco rallied around 6.5 per cent. Tata Steel, Jaiprakash Associates, Bharti Airtel, Hindustan Unilever and Infosys gained 4-6 per cent. On the other hand, Mahindra & Mahindra shed 5.5 per cent at Rs 1,073. ONGC, Maruti and ACC declined around 2 per cent.

The markets continue to remain in the bull zone although in the overbought territory. A weak close on Monday, following the RBI rate hike, could temper the current upmove and trigger a small correction. However, derivatives expiry next week could cushion most of the fall based on the options data. Hence, it would be a interesting fight between the bulls and bears in the week ahead.

Technically, the markets may slip to 16,100 in the worst case scenario with a three-month perspective. On the upside, the index is likely to target 18,300-18,500 in the next three months.

Next week, the index may find support around 17,370-17,250, while it may face resistance around 17,780-17,910.

The NSE Nifty moved in a range of 169 points. The index touched a high of 5,270, and a low of 5,101, before settling with a gain of 126 points at 5,263.

The index is likely to seek support around 5,200-5,160, while it may face resistance around 5,325-5,365.

The index is currently trading fairly above its short- and medium-term moving averages which are placed at 5,060 and 5,020, respectively.