WKLY TECH ANLYSIS: Markets are in oversold zone

WEEKLY TECHNICAL ANALYSIS

It was a dismal week in the history of stock markets, which saw the benchmark Bombay Stock Exchange (BSE) index, the Sensex, shedding 16 per cent (almost 2,000 points) to close at 10,528 on Friday. The decline was in line with a dramatic fall in stock markets worldwide.

The Sensex has now shed 25 per cent (3,514 points) in the last three weeks and is down by over a whopping 50 per cent from its all-time peak of 21,207.
 

KEY LEVELS
	Sensex	Nifty
S3	9260	2895
S2	9505	2970
S1	9750	3040
Close	10528	3280
R1	11310	3520
R2	11550	3590
R3	11800	3665
S-Support level R-Resistance level

Last week, it was suggested that 12,100 would be the last hope for the bulls and, indeed, once below that level, the index witnessed a free fall towards our next-mentioned level of 10,300. The index touched a weekly low of 10,240.

The intensity of the fall has been extremely severe and is worrisome. The speed at which  the support levels are being taken off makes it extremely difficult to predict a bottom. The current low of 10,240 could count as a short-term support as long as the index sustains above the 10,200-10,300 zone. In case the index falls further, it may seek support around 8,900-9,000 levels.

For the market to give a meaningful pull-back, the Sensex will have to clear the resistance zone of 11,550-11,730. The NSE Nifty moved in a range of 622 points and from a high of 3,821, the index slumped to a low of 3,199, and finally settled with a huge loss of 14 per cent (538 points) at 3,280.