Nifty bias to remain negative below 5,880

Weekly Technical Analysis

The markets changed tracks in the latter half of the week, owing to renewed selling pressure in banking, metal and fast-moving consumer goods shares. The Sensex, which touched a high of 19,742 mid-week, dropped to a low of 19,290---a fall of about 450 points from the week's high. The BSE benchmark index finally ended the week at 19,317, a loss of 151 points.

Among the Sensex-30 stocks, Jindal Steel fell 7.5 per cent to Rs 357. Coal India shed five per cent at Rs 332. Tata Motors, Tata Steel, ITC and ICICI Bank were the other major losers. Wipro soared about four per cent to Rs 416. Sun Pharma, Reliance and Infosys were the other major gainers.

The Sensex continues to remain in the ‘sell’ mode, as it has recorded a fresh low on the weekly charts. The bias is likely to remain bearish as long as the BSE benchmark index sustains below 19,630-19,480. On the downside, the index could drop to 19,125- or 18,900-odd levels. A slide to 18,500-odd levels cannot be ruled out. To arrest the downward pressure, the Sensex would need to sustain above 19,430-odd levels on a consistent basis.

According to the weekly Fibonacci charts, the Sensex is likely to seek support at 19,145-19,030 levels. One can expect a sharp reaction on a break of 19,030-odd levels. In case of an upside, the index could rally to 19,490-19,600.

Last week, the NSE Nifty moved in a range of 135 points. From a high of 5,971, it slipped to a low of 5,836, finally ending the week at 5,850, a loss of 37 points.

The short-term trend for the Nifty has turned negative, as the short-term moving average (20-day daily moving average, or DMA) slipped below the medium-term (50-day DMA). The index is trading very close to the lower end of the Bollinger Band. If the index breaks below 5,820, one may see downward pressure.

The Nifty closed on its short-term on the weekly charts. The bias is likely to be negative in case the index consistently sustains below 5,840, following which we could see a sharp slide to 5,650-odd levels, or to 5,550-odd levels.

Most momentum oscillators on the daily and the weekly charts such as the moving average convergence-divergence, the relative strength index and the Stochastic Slow are in favour of the bears. The average directional index, too, indicates any upside from current levels is likely to be short-lived.

On the upside, the Nifty would see resistance at 5,880-5,910. At best, it might spurt to 5,940-odd levels next week.

To sum up, the bias seems clearly negative in the short term. The Nifty would have overhead resistance at 5,880-5,910-5,940. On the downside, it would see support at 5,820; a sharp slide to 5,550-5,650 seems likely.