Wkly Tech Analysis: Watch out for the 8,435 level

Domestic markets slumped due to negative cues from the global markets. The Dow Jones Industrial Average Index plunged to more than a six-year-low on worrying signs of a deepening recession in the US.

The benchmark Bombay Stock Exchange’s Sensex plunged more than 8 per cent (792 points) to 8,843 led by heavy selling in financial and realty stocks. However, the Sensex is still 13 per cent (1,146 points) away from its October intra-day low of 7,697.

Among the index stocks, ICICI Bank slumped nearly 23 per cent last week. Reliance Communications, Hindalco, Reliance Infrastructure, Tata Steel, Mahindra & Mahindra, SBI, HDFC, Jaiprakash Associates and Larsen & Toubro dropped 11-14 per cent each.

The fibonacci analysis suggests that 8,435 will be a key level to watch out for in the Sensex on the downside till March-end. Only if 8,435 is broken, than one can expect a sharp slide of nearly 1,000 points to around 7,550 for the index.

In case the level holds, than the index must cross 9,650 on the upside for a strong upmove to follow. This week, the index is likely to find support around 8,510-8,405-8,300, while the index may face resistance around 9,175-9,280-9,385.

The NSE Nifty moved in a range of 244 points, from a high of 2,953, the index slumped to a low of 2,709, and finally ended with a loss of over 7 per cent (212 points) at 2,736. The corresponding level of 8,435 on the Sensex, for the Nifty is 2,575 - a break of which could see the index slide to 2,300-2,085-1,875, as per the quarterly analysis.

The daily chart movement is in favour of the bears, with the short-term and mid-term both the trends indicating bearishness. The Nifty at 2,735 is below the short-term (2,825) and the mid-term daily moving averages (2,882), and also the short-term moving average is currently below the mid-term moving average.

This week, the Nifty is likely to find support around 2,644-2,615-2,585, while resistance on the upside around 2,830-2,860-2,890.