During the week, the markets moved in a fairly narrow band, amid some choppiness. The BSE benchmark index dropped to a low of 19,650, after a surprise liquidity tightening move by the Reserve Bank of India. However, strength in fast-moving consumer goods (FMCG) and other select index heavyweights saw the index bounce back to a high of 20,257. It ended the week at 20,150, a gain of 191 points.
Among Sensex stocks, FMCG heavyweight Hindustan Unilever was the major gainer. The stock zoomed 14 per cent to Rs 687. TCS and Bharti Airtel rose about eight per cent each. ONGC, ITC, Bajaj Auto, Wipro and Reliance were the other major gainers. ICICI Bank tumbled about 10 per cent to Rs 959. Tata Steel, BHEL, Sterlite, HDFC, Jindal Steel and State Bank of India fell four-eight per cent each.
According to the Fibonacci charts, now, the Sensex is on the verge of facing resistance on the monthly and quarterly charts, at 20,260 and 20,275, respectively. Break and close above these levels would trigger fresh upside momentum, and the BSE benchmark index might rally to 20,550-20,820 levels.
As long as the Sensex sustains above 19,925-odd levels, the extreme short-term bias for the rest of the month is likely to remain bullish. Failure to sustain above 19,925-odd levels could trigger a fresh round of profit-taking.
Next week, the Sensex might seek support at 19,920-19,845-19,770; on the upside, it could face resistance at 20,380-20,455-20,525.
The National Stock Exchange (NSE) Nifty moved in a tight range of 155-odd points. From a low of 5,911, the index bounced back and rallied to a high of 6,067. The NSE index finally ended the week at 6,029, with a gain of 20 points. In the process, it gained 6.4 per cent (362 points) in the last four trading weeks.
The Nifty has managed to sustain above the key moving averages for the last seven trading days, a positive sign. To boost the sentiment further, the short-term (20-day) moving average has now crossed the long-term (200-daily moving average).
However, key momentum oscillators such as moving average convergence-diverge, ADX (average directional index) and the Stochastic Slow are either in overbought territory or showing negative divergence. Therefore, we may witness higher volatility.
In case of a correction, the index is likely to find multiple support levels on its way down. Key support can be expected at about 5,910 and 5,850. However, the weekly charts indicate the short-term trend is likely to remain positive, as long as the index sustains above the 6,000-mark. On the upside, it could rally to 6,200-odd levels.
The monthly charts, too, are showing positive formations, which indicates sustainability above the 5,900-level could trigger a sharp rally and the Nifty might re-test its recent highs of 6,300-odd levels.
To sum up, the pivot point for the Sensex for the rest of the month is 19,925. The Nifty has near-support at 6,000. The overall bias is likely to remain positive, as long as the index sustains above 5,910. Monthly charts indicate a likely re-test of the recent highs of 6,300-odd levels.