Investors can remain sanguine as long as the index holds above 13500. If there is a close below 13500, it will suggest the onset of a correction that can pull the index lower to 12500 or 11000 over the medium-term. As mentioned earlier, the strong post-election rally that took Sensex past 13000 has lowered the probability of a decline below March lows.
On the higher side, Sensex is nearing the key intermediate resistance at 16000 that is 61.8 per cent retracement of the down-move from 21206. Extrapolation of the first leg of the up-move from 8047 gives us the next target of 16332. Unless there is a big bang budget this July or the global equities get unduly ecstatic, these levels can rein in the current medium term up-move.
A range-bound movement between 14300 and 15600 is likely in Sensex next week. Immediate supports are at 14800 or 14300. Fresh purchases should be avoided on a decline below the second support since the next halt for the index can be at 13800. Resistances for the week would be at 15600 and 15830.