Wkly Tech Analysis: Trend may remain down till March-end

Weak global cues and selling by foreign institutional investors (FIIs) saw markets end weak for the third straight week. Moreover, they continue to register lower highs and higher lows during the period, which is a negative sign.

The Sensex touched a high of 16,553, but eventually ended with a loss of 442 points at 15,916. At the week’s low of 15,725, the index was down almost 10 per cent on year-till-date basis. With the Budget just three weeks away, any hope of a pre-Budget rally relies strictly on the fact that the major indices are close to long-term (200-day daily moving average) support levels.

Among index stocks, Jaiprakash Associates and SBI plunged 7 per cent each to Rs 128 and Rs 1,914, respectively. DLF, Hindustan Unilever, Reliance (at 52-week low), NTPC, Hindalco and BHEL were the other major losers. Hero Honda and Sun Pharma were the only prominent gainers among Sensex stocks.

Having broken their quarterly support, the markets are now likely to remain weak till the end of March. The Sensex will have to sustain itself above 16,625 in order to change the trend. However, the index is now very close to some other crucial support levels. The monthly support stands at 15,665, the long-term (200-day daily moving average) stands at 15,525, while the yearly support is at 15,380.

Weekly support levels for the Sensex are at 15,600-15,500-15,400 while resistance on the upside is at 16,230-16,330-16,430. The Nifty moved in a range of 259 points — from a high of 4,951, the index dropped to a low of 4,692. The index finally ended with a loss of 125 points at 4,757 and is down 495 points in the last three weeks.

Next week, the index is likely to face resistance at 4,855-4,885-4,915 and may find support around 4,700-4,625-4,595. The mid-term (50-days) average of the Nifty is currently above the short-term (20-days) average, which is a negative sign. Trend lines have turned negative on monthly charts as well. However, trend lines are positive on the weekly chart.