WKLY TECH ANALYSIS: Markets await a clear direction

A late charge by bulls helped key indices surpass crucial resistance levels. However, select momentum indicators are currently in a sell mode even while the trend is up. It seems that markets will remain directionless until a clear breakout in either direction appears.

The current key level for the Sensex is 16,940, above which the index may rise to 17,125. A break above 17,125 will ensure further strength to the index. On the other hand, a break below 16,940 could see the index slip to 16,550, which is likely to act as a strong support level. Only a break below 16,550 could trigger fresh weakness in the market. Broadly speaking, the Sensex is expected to move in the range of 16,550-17,125 till a breakout takes place.

This week, the Sensex moved in a range of 463 points. The index touched a high of 17,099, and a low of 16,636, before settling with a gain of 173 points at 17,022. On the past two occasions in October, the index after getting a weekly close above 17,000 had slipped in the following week. With the expiry week and global cues in focus, the market may see continued volatility next week.

Among the Sensex stocks - Tata Steel surged nearly 6 per cent to Rs 552. Hero Honda, Maruti, ACC, Tata Motors, TCS, Hindustan Unilever and Infosys were the other major gainers. On the other hand, Reliance Infrastructure shed nearly 5 per cent at Rs 1,098, followed by Bharti Airtel, down over 4 per cent.

The NSE Nifty moved in a range of 147 points. The index touched a high of 5,079 during the week, and finally ended with a gain of 53 points at 5,052.

The Nifty continues to trade above its short- and medium-term moving averages. The medium-term (50-days) moving average is currently above the short-term (20-days) moving average, which is a negative sign. The ADX (Directional Index) too is in the sell mode, but the trend is weak. It indicates whipsaw movements. On the positive front, the Moving Average Convergence Divergence (MACD) indicator is in a bullish mode as it hovers above the signal line.

The Nifty may face resistance around 5,105-5,145, while support on the downside could be around 4,995-4,960.