Wkly Tech Analysis: Free fall seen below 15,900

The markets after showing signs of recovery pared gains towards the end of the week. It still settled with a marginal gain, as global factors came into play. The Indian market firmed up mid-week after a subdued start, while other major global markets were closed. However, after the resumption of trading abroad, weakness was seen especially on Friday, which saw our markets pare almost the entire gain.

The Sensex after touching a low of 16,011, rallied to a high of 16,481. It slipped later and settled with a marginal gain of 39 points at 16,192. Other major global markets such as the US, Hong Kong, Japan and China were shut during the week for a day or two. In fact, China and Taiwan were shut throughout the week.

Among the index stocks — Hindalco surged over 8 per cent to Rs 150, and HDFC Bank rallied 6.5 per cent to Rs 1,700. Tata Steel, HDFC and Hindustan Unilever were the other major gainers. On the other hand, Bharti Airtel slumped 11.5 per cent to Rs 278. Reliance Infrastructure, DLF, Reliance Communications, Reliance and Sterlite were the other prominent losers this week.

Given the fact that we are headed to a week which will be dominated by the expiry of the February derivatives series and the Union Budget, predicting the direction of the market will be all the more difficult. One needs to be prepared for high volatility and keep an eye on key levels. The best strategy is to stay put till uncertainties vanish.

The Sensex is currently below its short-term moving average both on daily (20-day) and weekly (20-week) charts. The short-term moving average on the daily chart is at 16,240, while the short-term weekly moving average is at 16,784. The bias will remain down as long as the index trades below its short-term weekly moving average.

Although the Sensex has near support at 16,000, one needs to carefully watch 15,900 as a key level, for a break below 15,900 could trigger a free fall up to 15,300 at least.

The NSE Nifty moved in a range of 146 points, from a low of 4,784, the index moved up to a high of 4,930, and finally closed with a gain of 18 points at 4,845.

Next week, the Nifty is likely to face resistance around 4,900-4,918-4,935, while it may seek support around 4,813-4,772-4,755.

The daily short-term moving average of the index is at 4,854, and the short-term weekly moving average is at 5,001. The long-term (200-day) moving average on the daily chart is at 4,719, and the weekly long-term moving average at 4,200.