Markets seen in choppy waters

The markets as expected firmed up this week with both the BSE and NSE benchmarks going past the psychological marks of 17,000 and 5,000. The Sensex touched a high of 17,098 and finally settled with a gain of 3.4 per cent (565 points) at 16,994.

Among the index stocks — Tata Motors jumped nearly 12 per cent to Rs 795. Jaiprakash Associates soared 10.5 per cent to Rs 146. Tata Power, Tata Steel, Bharti Airtel, Mahindra & Mahindra, DLF, ITC, ACC and Reliance Communications rallied 5-10 per cent each. ONGC, however, slipped 2 per cent to Rs 1,095.

While the daily charts have entered the overbought zone, the weekly charts are indicating more positives. However, select momentum indicators are showing mixed signals. The Directional index is indicating a positive sign, MACD is still showing a downtrend. On the other hand, RSI and the Stochastic Slow have entered overbought zones on the daily charts.

Given such mixed signals, one can be sure of choppy trades going ahead. While the bias may largely remain positive, steep cuts in intra-day deals cannot be ruled out. Overall, one can expect the markets to consolidate in the range of 16,600-17,250 during next week.

The current upmove will remain intact as long as the Sensex sustains above 16,600. The index is likely to find support around 16,740-16,600, while on the upside it is likely to face resistance around 17,245-17,400.

The NSE Nifty moved in a range of 183 points. The index touched a high of 5,119, and quite easily maintained its momentum of higher tops and higher lows during the week. The index finally settled with a gain of 166 points at 5,089.

The Nifty short-term (20-days) moving average is currently at 5,017, and the medium-term (50-days) moving average at 4,877. Any downturn could see the index seek support around these levels. Next week, the index may seek support around 5,020-4,975, while it may face resistance around 5,160-5,200.

The longer-term picture for the Nifty suggests it may target 5,900 during the course of the year as long as the index is able to hold its recent low of 4,675.