Wkly Tech Analysis: A gap-up opening on the cards

The Reserve Bank of India's (RBI’s) surprise CRR (cash reserve ratio) cut is enough a reason to bring cheers to the market on Monday morning. However, going ahead, it seems unlikely the up move will be sustainable during the week. RBI, in a surprise move, on Friday, lowered the CRR by 75 basis points, days ahead of its monetary policy review on March 15.

This week, the Sensex touched a high of 17,692, and then slipped to a low of 17,008. The index eventually ended with a loss of 134 points at 17,503.

Among the index stocks, Hindalco slumped nine per cent to Rs 135. Sterlite, BHEL, Gail India, Reliance and Tata Power were the other major losers, down five-eight per cent each. Tata Motors, however, rallied nearly 4.5 per cent to Rs 279. ITC, HDFC, ICICI Bank, Coal India and Maruti were the other notable gainers.

With RBI event more or less out of the way, the market focus will be on the Union Budget on March 16. Hence, expect higher volatility towards the end of the week.

According to the Fibonacci chart, the Sensex has given a weak signal - both on the monthly and quarterly charts. Acco-rdingly, the Sensex is likely to face stiff resistance around 18,075 and 18,300. On the downside, the index could test 16,500 this month.

Next week, a gap-up opening seems very much likely. The Sensex may clear its first hurdle around 17,765. The next hurdle for the index is around 17,925. Longer the index stays above it, better it would be for the markets. On the downside, the index could test 17,240-17,080.

The NSE Nifty moved in a range of 200 points - the index touched a high of 5,382, and a low of 5,171. The index finally ended with a marginal loss of 26 points at 5,334.

The Nifty corrected 38.2 per cent of the previous rally (from 4,531 to 5,629) at 5,171, before bouncing back a wee bit. On the upside, the index is now likely to face resistance around 5,450. Consistent trade above 5,450 could pave the way for the index to re-test its recent high of 5,630.

However, a failure to sustain above 5,450 could mean a fresh correction to 50 per cent re-tracement levels, which indicates a target of 5,050-odd levels.

The momentum oscillators, both on the daily and the weekly charts, indicate consolidation. The key levels to watch out for could be 5,450 on the upside and 5,200 on the downside.