Markets ready for a major move

Following the consolidation last week, the markets look set for a major move this week. However, it is not clear if the major move will be a decisive (breakout or breakdown) one or a both-way one.

Technicals suggest that the markets are likely to first make an up move, followed by a sharper downswing in the coming days. The Sensex is likely to face resistance at 15,670-15,700, above which the index may spike to higher levels backed by significant short-covering by the bears. However, if the index fails to break above the 15,670-15,700 resistance zone, one may see a sharp reversal wherein the index may plunge below the 14,700-level.

Last week, the Sensex, after a dismal start, consolidated around the 14,700 level before recovering partially and settling at 15,241, down 1.1 per cent (171 points). The intra-week range for the index narrowed to 600 points, from around 850 points in the last three weeks.

Among the index stocks, HDFC surged over 5 per cent to Rs 2,432 and BHEL gained 4.5 per cent to Rs 2,298. Maruti, HDFC Bank, Mahindra & Mahindra, Hindustan Unilever and Tata Power were the other notable gainers. On the other hand, Tata Motors tumbled over 7 per cent to Rs 433. Reliance Infrastructure and ACC shed 6.5 per cent each. Tata Steel, Reliance, Sterlite, Reliance Communications, Hindalco, DLF, Sun Pharma and Jaiprakash Associates declined 3-5 per cent each.

The NSE Nifty moved in a range of 225 points. The index, after touching a low of 4,353, recovered partially and ended with a loss of 51 points at 4,529.

The Nifty has near resistance around 4,615-4,640, above which the index may make a fresh attempt to break past the 4,700 mark. However, on the downside, a sustained stay below 4,400, could see the index slide up to 4,170.