Wkly Tech Analysis: Markets likely to consolidate

The markets corrected for the second straight week after the massive 15.4 per cent rally in the preceding seven weeks. The Sensex exhibited a volatile movement, as the index recovered from early week lows of 17,382 and touched a high of 18,001, only to slip back into the negative terrain. The BSE benchmark index finally settled with a loss of 287 points at 17,637.

Among the index stocks, DLF was the major loser for the second week running, down over 10 per cent at Rs 204. Mahindra & Mahindra, Hero MotoCorp, TCS, Jindal Steel and Larsen & Toubro were the other major losers, down four-seven per cent each. On the other hand, Sterlite surged nearly five per cent to Rs 124. Sun Pharma, Maruti Suzuki and Bharti Airtel were the other notable gainers.

Last week, we had explained that according to the quarterly Fibonacci charts, the trend is likely to remain up as long as the index maintains above 17,170.

Similarly, now on the monthly charts, the index appears marginally weak, which means it can break this week's low of 17,382.

So, going ahead, one should watch out for major support coming around 17,200-odd levels, and resistance around the 18,000-mark. The longer-term picture remains the same, with the chances of selling intensifying once the index dips below 17,170.

The NSE Nifty moved in a range of 191 points, from a low of 5,268 the index rallied to a high of 5,459. The Nifty ended the week with a loss of 70 points at 5,359.

According to the weekly charts, the index seems to be consolidating support around its 50-week moving average, which is at 5,257. In case the Nifty is able to sustain above 5,250, then we could see a phase of consolidation in the range of 5,200-5,550.

Select momentum oscillators like the MACD (moving average conv-ergence/divergence) and the Stochastic Slow on the weekly charts are in favour of consolidation, hence the likelihood of it remains high. However, in case the index breaks below 5,250, then it could possibly test its next major support at 5,070.

Next week, the Nifty is likely to face resistance around 5,430-5,480, while seeking support around 5,285-5,240.