Wkly Tech Analysis: Nifty set to test 200 DMA

The markets staged a strong rally after a rather tepid start to the week. The Sensex, after touching a low of 17,792, rebounded and moved from strength-to-strength on the back of fresh buying interest in some beaten down sectors like realty and capital goods. IT and banking also logged smart gains during the week. The BSE benchmark index surged 1,066 points from the week’s low to a high of 18,858 and settled with a strong gain of 5.2 per cent, or 937 points, at 18,816. This was the biggest weekly gain in percentage terms since July 17, 2009.

Among the index stocks, Realty major DLF zoomed over 13 per cent to Rs 249. Jaiprakash Associates, ICICI Bank and BHEL surged around 9 per cent each. Infosys, HDFC, Tata Power, Bharti Airtel, Sterlite, M&M, Tata Motors and ITC were the other major gainers. There were no losers in the Sensex 30 stocks this week.

The Sensex having closed at the highest point of the month, re-affirms the early positive breakout given on the Fibonacci charts. The next logical target for the index seems to be 19,270 and 19,650.

The NSE Nifty moved in a range of 319 points, from a low of 5,348, the index surged to a high of 5,667, and ended with a gain of 281 points at 5,654.

The index is on the verge of testing its 200-DMA, which is just 30-odd points away from the current levels. Next week, the index is likely to face resistance around 5,775-5,850, and on the downside is likely to seek support at 5,530-5,455.

A Fibonacci-based retracement of the fall from the November 8, 2010, high of 6,336 to a low of 5,178 on February 11, 2011, indicates next major hurdle for the Nifty around 5,755, which is the 50 per cent retracement level of the fall. Further, the next key resistance would be around the 61.8 per cent retracement level which stands at 5,894.