Sensex likely to dip below 17,000

The markets ended lower for the fifth straight week and the road ahead continues to look a bit rocky. The Sensex, as expected, faced resistance around the 17,700-level, and on the downside consistently found support around 17,200-level.

The BSE benchmark index eventually ended the week with a loss of 100-odd points at 17,362. In the process, the index has shed five per cent (928 points) in the last consecutive five weeks.

Among index stocks - Jindal Steel was the major loser this week, the stock slumped nearly seven per cent to Rs 536. Hindalco and Tata Power tumbled around six per cent each. Tata Motors, Maruti, Reliance Industries and SBI were the other big losers. On the other hand, Sun Pharma surged over nine per cent to Rs 579. Hindustan Unilever, Hero MotoCorp and ITC rallied around three per cent each.

Both the monthly and the quarterly charts indicate that the Sensex is likely to break the 17,000-mark in the near term. On the downside, the index can slip to 16,840, or further deeper to 16,500-odd levels. In case of an upmove, the index is likely to face stiff resistance around 17,570 and 17,700. The NSE Nifty moved in a range of 180 points, the index registered the week’s high and low, both on Thursday, March 22, as the markets exhibited high volatility on the back of reports indicating a likely mining scam. From a high of 5,386, the index tumbled to a low of 5,206, but recovered partially to end the week with a loss of 40 points at 5,278.

On the positive front, despite five straight losses, the Nifty has managed to stay above its 50-week moving average of 5,230 on a weekly closing basis. Also, according to the daily charts, the index has found consistent support closer to the 5,200-level, which is the lower end of the Bollinger Band.

The index has multiple support levels between 5,150 and 5,200-levels, as the long-term (200-day) daily moving average (DMA) is around 5,157. However, on the flip side, the momentum oscillators lack strength at the moment, which may result in significant resistance at higher levels. In the short-term, the Nifty is likely to face stiff resistance at around 5,330-level, above which the index can rally to 5,450-odd levels. However, a close below 5,220 would invite trouble for the index, and the Nifty may then drop to 5,050-odd levels.