Wkly Tech Analysis: Strength above 5,930 likely

The markets trended lower the entire week, and despite a 1.4 per cent rise on Friday, the Sensex finally ended the week with a loss 2.3 per cent (458 points) at 19,510. The markets had opened on a strong note on Monday and the Sensex touched a high of 20,218.

However, profit-taking at higher levels saw it pare gains at close. Thereafter, the markets witnessed a broad-based selloff amid concerns over Sebi reports on alleged price-rigging by some promoters. The selloff saw the BSE benchmark tumble to a low of 19,075, down over 1,140 points from the week’s high.

Among index stocks. SBI slumped almost 11 per cent to Rs 2,737, followed by Reliance Communications, down 9.6 per cent at Rs 126. DLF, HDFC Bank, Reliance Infrastructrure, Cipla, ICICI Bank, Tata Motors, Bharti Airtel, HDFC and Larsen & Toubro were the other major losers. On the other hand, Wipro surged over five per cent to Rs 450. NTPC, BHEL, Jindal Steel and Reliance were the other notable gainers.

According to monthly fibonacci calculations, this week’s low of 19,075 will be very crucial for the Sensex. As long as the index stays above it, we could see some fresh buying. However, a break of 19,050 could spell more trouble for the markets, and the Sensex may slip all the way to 18,700.

The NSE Nifty moved in a range of 348 points. From a high of 6,069, the index plunged to a low of 5,721, and finally settled with a loss of 135 points at 5,857.

The markets collapsed as the Nifty struggled around its short-term (20-days) moving average. The momentum on daily charts seems to be in favour of the bears. However, if the Nifty manages to close above 5,930, one could see some strength coming in the market.

On the downside, if the Nifty breaks below 5,735, it is likely to test its long-term (200-days) moving average in the coming days.