Upside seems capped

As expected, the markets witnessed choppy movement through the week. From a high of 19,755, the BSE Sensex tumbled to a low of 19,179, amid negative news flow. First, Consumer Price Index-based inflation rose to more than 10 per cent. Later, alleged reports of money laundering by some of the biggest private sector banks dampened the market sentiment. At 19,428, the BSE benchmark finally ended the week with a loss of 255 points.

Among the Sensex stocks, Bajaj Auto was the most prominent loser, falling about eight per cent to Rs 1,853. ICICI Bank, Hindalco, GAIL India, Bhel and Tata Motors were the other major losers---falling four to six per cent each. Hindustan Unilever surged 4.5 per cent to Rs 458. Tata Power, Mahindra & Mahindra and State Bank of India were the other prominent gainers.

The monthly Fibonacci charts show the Sensex seems to have negated the benefit of the 'buy' signal in the preceding week. To maintain a positive bias, now, the index has to sustain at about 19,300. On the upside, the index is likely to face considerable resistance at 19,600-odd levels. If 19,100-odd levels are frequently breached, these could be early signs of a steep decline. The fall could be as large as 1,000-odd points. In other words, in case the Sensex is unable to sustain at more than 19,100-odd points, we could see a fall to 18,100-odd levels in a couple of weeks. In the interim, the quarterly charts indicate support at 18,750-18,585.

On the positive side, the Sensex would gain fresh upside momentum only on a break above 19,600. Following this, the index may rally to 19,900-20,100 levels.

The NSE Nifty moved in a range of 179 points. From a high of 5,971, the index slipped to a low of 5,792, ending the week at 5,873, a loss of 73 points. The Nifty seems to be critically poised, with near-support around 5,850. In case the index sustains at above 5,850 consistently, the rise could resume.

On the flip side, the index has failed to cross its medium-term moving average on three attempts. The 50-day daily moving average is about 5,940. Now, this acts as an immediate hurdle for the index. Above this, the index may face resistance at 5,970 and 6,000.

One of the key momentum oscillators---the Stochastic Slow---is in favour of the bears, both on the daily, as well as weekly charts. Therefore, for now, it seems the upside is capped at 5,940-odd levels. On the downside, the next support for the Nifty is at 5,800-odd levels, below which the index could slide to 5,685-odd levels.

To sum up, the momentum seems to be in favour of the bears, while the upside seems capped at 5,940-odd levels. On the downside, the index has near-support at 5,850, and far-off support at 5,800, below which we could see a slide to sub-5,700 levels.