More weakness below 5,870

The markets drifted lower through the week, owing to weakness in the rupee. The BSE benchmark Sensex slipped to a low of 19,395, before ending the week at 19,429, a loss of 331 points.

Among the Sensex 30 stocks, HDFC was the major loser, falling about six per cent to Rs 840. Bhel, Hero MotoCorp, Sterlite, Bajaj Auto, NTPC, Bharti Airtel and Tata Motors were the other major losers, down four to six per cent each. Dr.Reddy's rallied about five per cent to Rs 2,193. Wipro, Infosys and TCS were the other prominent gainers.

According to the monthly Fibonacci charts, the Sensex, after giving an early 'buy' signal, is precariously poised near its major support of 19,460-odd levels. The BSE index has to sustain above 19,460 for further strength in the markets. The 19,460-level is also a crucial support on a quarterly basis. In case the Sensex rises above 19,460, we might witness further downward pressure---the BSE index might decline towards its major monthly support of 19,070-odd levels.

The NSE Nifty moved in a range of 142 points. From a high of 6,011 early in the week, it dropped to a low of 5,870, ending at 5,881, a loss of 105 points.

Now, the Nifty has settled below its short-term (20-day) and medium-term (50-day) daily moving averages (DMA) on the daily charts, a bearish sign. The next stop for the index could be the long-term moving average (200-DMA)---5,790.

Currently, one of the key momentum oscillators, the Stochastic Slow, is in oversold territory. Therefore, a sharp pull-back from support levels can't be ruled out. However, the weekly charts paint a different picture. The weekly Stochastic Slow has just turned bearish. According to the weekly charts, the Nifty has near-support at about 5,870. Sustained trade below 5,870 would favour the bears. Following this, the Nifty could slip to 5,790-odd levels; a fall to 5,700-odd levels also looks likely.

In case the Nifty sustains above 5,870, a sharp pull-back to 6,025-odd levels cannot be ruled out.

To sum up, next week, the pivot point for the Nifty is 5,870. The index has to sustain above it for a bullish bias, else it could slip to its 200-DMA at 5,790.

For the Sensex, the key level remains 19,460---sustained trade below 19,460 could trigger a fall to 19,070-odd levels.