As expected, the markets corrected last week, ending with a loss of about 0.5 per cent. At 19,856, the Sensex scaled a fresh two-year high, before slipping to a low of 19,596, a fall of 260 points. The BSE benchmark index finally settled at 19,664, a loss of 0.6 per cent.
Thanks to a sharp rally on Friday, Infosys topped the list of gainers among the Sensex-30 stocks, recording a gain of 15.5 per cent at Rs 2,713. Tata Motors, Wipro and ONGC were the other major gainers. Hindustan Unilever and Bhel fell about six per cent each to Rs 499 and Rs 227, respectively. Jindal Steel, Hindalco, Bajaj Auto, NTPC and Tata Steel were the other major losers.
According to the monthly Fibonacci charts, after giving a 'buy' signal, the Sensex slipped to below the resistance (R3) point at 19,715. Now, the bias is likely to be slightly negative, as long as the index stays below 19,715. On the downside, the BSE index would see support at 19,600, 19,500 and 19,425. Given these multiple support levels, a sharp fall at this point seems unlikely. In case the Sensex breaks below 19,425, the next support level would be 19,250.
Pivot points: The Sensex may face resistance at 19,760-19,825, while it may seek support at 19,565-19,500.
The NSE Nifty moved in a range of 100-odd points. From a fresh two-year high of 6,042, the index slipped to a low of 5,941, finally settling at 5,951, a loss of 65 points.
According to the daily charts, the Nifty is on the verge of testing support at its short-term (20-day) daily moving average---about 5,930. Below this, the index may look to fill the gap up to 5,900-odd levels.Select momentum oscillators on the daily charts such as the moving average convergence-divergence (MACD), the 14-day relative strength index (RSI) and the Stochastic Slow are in favour of the bears. Therefore, a sustained fall to 5,825-odd levels cannot be ruled out.
Only the Stochastic Slow has given a negative divergence on the weekly charts, while the MACD and the RSI are yet to give any negative cues. For a confirmed 'sell' signal on the weekly charts, one has to wait for the RSI to turn negative. Therefore, a pull-back rally can take the index back to 6,030-odd levels.
To sum up, the bias looks negative, but the Nifty would see multiple support levels--- 5,930-5,900 and 5,825. Hence, a sharp pull-back from these support points cannot be ruled out. On the upside, the index can re-test 6,030-odd levels.