Wkly Tech Analysis: Markets likely to bounce back

Last week, the Sensex moved within the expected range of 14,200-15,100. The index shrugged off an early weakness as it recovered from a low of 14,281 and rallied to a high of 15,106 on Tuesday. However, a significant weakness in the last two days saw the index dropping back to lower levels and finally ending the week on a soft note — down 81 points at 14,484.

Among the index stocks, Ranbaxy was the major loser, down over 13 per cent at Rs 519. Tata Steel, Sterlite, Tata Motors and Bharti Airtel declined 4-7 pe cent each. On the other hand, State Bank of India (SBI) rallied over 8 per cent to Rs 1,519. ONGC, Maruti, ACC, TCS and Tata Power gained about 3-5 per cent each.

Positive signs, which were visible last week, are now changing to a bit of caution. However, the downside seems limited, with the Sensex likely to find considerable support around the 13,970 level. The upmove will gain momentum once the index crosses the 15,100-15,170 block.

The Nifty, too, faced resistance around the 4,530 level mentioned last week and then retreated to lower levels. The index finally ended with a marginal loss of 8 points at 4,352.

Given weak global markets, the index may see some more downside early next week, but it is likely to find support around the 4,200 level. Besides, the 4,050-4,080 levels should be seen as a strong support base for the index this month.

The Nifty’s short-term daily moving average is 4,540, while the mid-term is around 5,060 and the long term around 3,600.