Sensex may maintain a temporary low

After sending a sell signal last week, the Sensex touched a low of 16,420 — down nearly 900 points for the week. The index, thereafter, consolidated and finally ended on Friday at 16,840, losing 466 points.

Among the index stocks, Tata Group stocks (Tata Power, Steel, Motors and TCS) witnessed heavy selling and were down 10-12 per cent. Infosys, Hindalco, Wipro, Bharti Airtel and Sterlite were the other major losers. Auto stocks, however, bucked the trend. Mahindra & Mahindra zoomed 13 per cent to Rs 740. Hero MotoCorp, Maruti Suzuki and Bajaj Auto ended with gains of four to six per cent each.

Going ahead, the Sensex is likely to maintain a temporary low around the 16,240 to 16,350 support zone. While global cues will continue to play a dominant role, markets may look to find their own course in due time. The upside, however, looks capped around 17,350-odd levels in the short-term.

The NSE Nifty moved in range of over 250 points. The index tumbled to sub-5,000 levels to touch a low of 4,946. It, however, recovered partially and ended at 5,073, down 138 points.

Ovet the last three weeks, the index has shed 10 per cent (561 points). Barring a single occasion in mid-2011, the Nifty has not seen a fall for more than three weeks since October 2008.

The medium-term support is around 4,835. It will not be surprising to see a sharp pullback from those levels. One should, however, avoid bottom fishing, as the charts clearly indicate that the bears will be dominant below the 5,000-mark. On the upside, the Nifty has left a gap of around 5,330 that it would have to fill.