Volatility may persist
Satyam receded into the background as Infosys, TCS, HDFC Bank et al took the centre stage last week armed with their score cards. This earnings season promises to be an entertaining one with the company representative's facial expression and body language undergoing a closer scrutiny than the actual earnings.
Interestingly the pattern is the same whether one looks at the chart of the Sensex or the DJIA or the FTSE 100. All these indices have eased lower and are poised at the 61.8 per cent retracement of the up-move from November 2008. A step lower will take them to the 2008 lows again and recovery from current levels will start the third leg of the up-move from November 2008 trough.
In other words, bulls have the room to manoeuvre the Sensex higher as long as it does not close below 9000. The week ahead should make the medium-term trajectory of the Sensex more apparent.
Volatility is likely to persist in the week ahead. Key resistance for the short-term is at 9509. Failure to rally beyond this level will imply that the index is bracing for another plunge lower to 8429 or 8316. Resistance beyond 9509 would be at 9858.
Text & Images: Business Line