Some profit-taking likely this week

The Nifty finally went past 5,500, due to fresh buying in IT (information technology) and banking stocks. The index struggled for almost five weeks around this mark before crossing it this week. The Nifty settled with a gain of 79 points at 5,531.

The index seems poised for higher levels in the medium to long term. However, it could face some resistance around 5,580 next week. The bulls will continue to hold the upper hand as long as the index stays above 5,525. On the downside, the index may slip to 5,400.

The 20-day moving average is at 5,443 and the 50-day moving average is at 5,361. The index has closed marginally higher at 5,530 from the higher end of the bollinger band, which is at 5,525. Hence, some profit-taking in the first half of the week is likely.

Further, the MACD has turned positive on both daily and weekly charts. The weekly chart suggests support for the Nifty at 5,265. The RSI is also close to the overbought zones, both on weekly and monthly charts. Also, the momentum indicator, Stochastic Slow, is in a fairly overbought zone both on weekly and monthly charts. Hence, one should be prepared for a meaningful correction in the medium term.

The Sensex moved in a near 500-point range this week. From a low of 17,997, it rallied to a high of 18,475, and settled with a gain of 235 points at 18,402.

Among index stocks, Hindalco and HDFC Bank topped gainers’ list, up seven per cent each at Rs 178 and Rs 2,231, respectively. ITC surged 4.5 per cent. Jindal Steel, Larsen & Toubro, DLF, ACC, Jaiprakash Associates and ICICI Bank were up two-four per cent each. On the other hand, Reliance Communications, Tata Power, SBI and Bharti Airtel were the prominent losers.

According to the fibonacci calculations, the monthly chart indicates support for the Sensex at 18,200 while the quarterly chart indicates resistance around 18,500. The yearly chart indicates resistance around 19,550.