Resistance seen around 2,825

The markets bounced back last week in tandem with other global markets, led by a strong rally in the US. The Sensex, which touched a low of 8,110, rallied sharply to a high of 8,793 – up 683 points – before settling with a gain of over 5 per cent (431 points) at 8,757.

Among the index stocks, Tata Motors, ICICI Bank, Sterlite and HDFC soared by 13-17 per cent each. Maruti, Reliance, Mahindra & Mahindra, Hindalco, Reliance Communications, Grasim, Infosys, Tata Steel, Larsen & Toubro and ACC rallied by 6-10 per cent. Bharti Airtel, however, plunged by over 7 per cent, and NTPC shed 4 per cent.

The index, after having seen a breakdown, has bounced back. Hence, the upmove looks susceptible and is likely to fizzle out sooner or later.

As per Fibonacci calculations, the Sensex has given a sell signal on both monthly and quarterly charts. The first signs of weakness from hereon should be the breaking of 8,435. On the upside, the Sensex is likely to face resistance at around 8,900-9,000 levels. In a very extreme scenario, this particular pullback may see the index move up to 9,580-9,650.

This week, the Sensex is likely to find support at around 8,495-8,415-8,335, while resistance on the upside could be at around 9,015-9,100-9,180.

The NSE Nifty moved in a range of 171 points. From a low of 2,556, the index rallied to a high of 2,726, finally ending with a gain of 99 points at 2,719. The index is likely to face some resistance at around 2,760, above which the index may move up to 2,825, which would be a crucial hurdle this week.

On the downside, the index is likely to find support at around 2,655 and, further deeper down at around 2,615-2,590.