Weakness seen in first half

Markets rallied smartly at the beginning of the week owing to strong gross domestic product numbers and easing Dubai debt woes. The benchmark indices consolidated at higher levels in the second half of the week.

The Sensex touched a fresh six-week high at 17,361, and finally closed with a gain of 2.8 per cent (470 points) at 17,102. Among the index stocks - Tata Motors zoomed nearly 13 per cent to Rs 710. Hindalco soared 11 per cent to Rs 147. Bharti Airtel, DLF, Reliance Communications, Sterlite, Jaiprakash Associates and Tata Steel surged 6-9 per cent each. On the other hand, Hero Honda and Hindustan Unilever ended with losses of 4 per cent each.

The Bollinger bands have got narrower suggesting a range of 17,400-16,500 for the index. Two consecutive closes above 17,400 should trigger a fresh upmove with immediate target around 18,100-18,600. On the downside, the index has considerable support around 16,940 and 16,780. A sustained stay below 16,500 could negate the uptrend. One could expect weakness in the first half of the coming week. So there is a need to watch the downside levels closely. While the daily oscillators are close to indicating selling pressure, the weekly oscillators are still firmly in the buy mode.

The NSE Nifty moved in a range of 239 points. The index touched a high of 5,181. and finally settled with a gain of 3.4 per cent (167 points) at 5,109. The trading band for the Nifty has narrowed down to 5,183-4,890. One needs to watch these levels closely for a breakout on either side.

Currently, the bias is positive as the index has closed above its short-term and medium-term moving averages. While the short-term (20-days) moving average is at 4,988, the medium-term (50-days) moving average is at 4,890.