Wkly Tech Analysis: For Nifty, strong support expected around 5,050

The markets ended lower for the second straight week as the European worries escalated. First, it was the Greece riddle and its likely fallout on the euro zone that troubled the global markets. Now, it seems a bigger problem, with Italy's debt coming into focus, following a sharp spike in their bond yields.

The holiday-shortened (two trading holidays) week saw the Sensex swing in a range of 560-odd points. The index, from a high of 17,685 dropped to a low of 17,097 and finally ended with a loss of over two per cent (370 points) at 17,193.

Going ahead, the global worries and disappointments on the earnings front will continue to weigh on investor sentiment. However, we could witness sharp rallies in case there is any iota of positive surprise.

Index heavyweights State Bank of India and Tata Steel were the major losers, down over eight per cent each. DLF, Hindalco, ICICI Bank, Maruti, Sterlite, Larsen & Toubro, ONGC and Jaiprakash Associates were the other major losers. On the other hand, Hindustan Unilever, with a gain of 4.5 per cent, was the top gainer among the Sensex stocks. TCS, Wipro and Hero MotoCorp were the other prominent gainers.

According to the monthly fibonacci charts, the index has not given any signal as of now. However, it seems headed towards its first monthly support level of 16,880. In case this is broken, the index may drop lower to 16,625 or 16,365. The NSE Nifty moved in a range of 175 points: From a high of 5,317, the index slipped to a low of 5,142 and settled with a loss of 115 points at 5,169.

The index has closed below its short-term (20-days/weeks) daily moving average on both the daily and the weekly charts. The bears are likely to have the upper hand, as long as the index trades below 5,187. However, the downside seems limited from current levels, with strong support expected around 5,050-5,000.

The momentum oscillators on the daily charts are in favour of a further down move, while the weekly momentum oscillators are in favour of an up move. Hence, in case there is weakness in early part of the week, one can expect a sharp recovery in the latter half of the week.