Momentum indicators favour an up move

While the markets may have not moved much in the last three weeks, intra-week volatility has kept many traders on their toes. The BSE benchmark index, the Sensex, swung in a range of 720 points. From a low of 18,976, the index rebounded into the positive zone and touched a high of 19,696. It finally settled at 19,602, with a gain of 1.1 per cent (215 points).

Among the Sensex 30 stocks, ONGC surged 6.4 per cent to Rs 304. Mahindra & Mahindra too rallied nearly six per cent to Rs 766. Hindalco, Hindustan Unilever, Sterlite, Maruti, HDFC, Bajaj Auto, Jindal Steel and Wipro were up 3-5 per cent each. On the other hand, BHEL plunged 7.7 per cent to Rs 2,058. Infosys, Hero Honda, Larsen & Toubro and Reliance Communications were the other major losers.

The short-term and mid-long term trend continues to be bullish on the weekly charts.

Momentum indicators like the MACD (Moving Average Convergence Divergence), RSI (Relative Strength Index) and the Slow Stochastic also indicate a positive strength. However, the ADX (Average Directional Index), although positive, is showing lack of strength in the current trend.

The Sensex broke its Fibonacci-based monthly support of 19,050 in intra-day trade, but managed to sustain it on a closing basis.

Since the markets ended on a positive note, one can look for support around 19,330-19,150 in the week ahead. Conversely, the index can face resistance around 19,880-20,050.

The NSE index, or Nifty, moved in a range of 220 points. From a low of 5,693, it surged to a high of 5,913, and finally ended one per cent higher at 5,885.

The index seems to have found support around its short-term trend line, which is closer to the 5,780 level. Further lower, it has considerable support around 5,735 (200-day daily moving average), 5,630 (according to the weekly charts) and 5,574 (50-day daily moving average).

On the upside, it is likely to face some resistance around 6,030, above which it can flare up to 6,170.