Weekly Tech Analysis: Sensex support at 12,100

The Sensex ended lower for the second straight week on the back of significant weakness in metal and energy stocks. The index moved in a range of 1,050, and finally settled with a loss of 4.4 per cent (576 points) at 12,526. In the process, the index has shed 10.8 per cent (1,516 points) in the last two weeks.

So also, the index is down exactly 38.2 per cent from year till date on a closing basis. A point to note is that the 38.2 per cent is a Fibonacci level. Also, the week’s low of 12,153, as mentioned last week, is close to the 100 per cent retracement (12,100) of the last year’s swing. If both theses conditions hold out, then one may see the index at least place a temporary bottom around current levels.

The 12,100-level is a kind of the last hope for the bulls as a break of the level could see the index sliding to 10,300 and further deeper down to 9,000 in the coming days.

Last week, among index stocks, Tata Steel, Reliance Infrastructure, Sterlite, Tata Motors, Reliance, ICICI Bank, Tata Power and DLF dropped 9-15 per cent each. On the other hand, SBI, HDFC Bank, Maruti and ACC gained 2-3 per cent each.

The NSE Nifty moved in a range of 285 points, from a low of 3,715, the index recovered and rallied to a high of 4,001, before tumbling back and ending at 3,818, down 167 points.

Thankfully, the charts do not look that bearish as they did last week. The bollinger bands support at 3,760 should be carefully watched for a possible pull-back. On the negative side, a sustained stay below 3,760 will accelerate the downmove.