The markets rallied for the third straight week on the back of hopes of a rate cut and good earnings by select index heavyweights. The Sensex touched a high of 19,792, and finally ended with a gain of 1.5 per cent (289 points) at 19,576.
Among the Sensex 30 stocks, Hindustan Unilever zoomed over 23 per cent to Rs 572. Wipro, Sterlite and Mahindra & Mahindra surged nearly eight per cent each to Rs 356, Rs 97 and Rs 959, respectively. Infosys, TCS and ITC were the other major gainers. On the other hand, Bajaj Auto, Gail India and Tata Motors were the prominent losers.
Since we are at the start of the month the key monthly Fibonacci levels to watch out for are as follows: Support around 18,940-18,765-18,585, while resistance around 20,070-20,245-20,420.
According to quarterly Fibonacci charts, the Sensex has crossed the R1 and R2 level, and is now likely to test R3 around 19,850. The bias is likely to remain fairly positive for the next two months as long as the BSE index sustains above 19,460.
Next week, the Sensex is likely to move in the range of 19,260-19,890, with support expected around 19,320-19,380, and resistance around 19,770-19,830.
The NSE Nifty moved in a range of 151 points. The NSE index from a low of 5,868, rallied to a high of 6,019, and finally ended with a gain of 73 points at 5,944.
The Nifty continues to trade firmly above its key moving averages, like the short-term, medium-term and the long-term. Key momentum oscillators on the daily and the weekly charts are indicating a mixed bias.
While the MACD, 14-day RSI and the ADX (Average Direction Index) are in favour of the bulls on the daily charts, the Stochastic Slow has turned negative. On the other hand, RSI and the ADX index and Stochastic Slow are in favour of the bulls, while the weekly MACD is negative.
Technically, the Nifty needs to move past the 6,020-level to gain further strength. In case, the index fails to cross 6,020 in the next couple of session, one can then assume that the Nifty may have hit a temporary high at 6,020.
Going ahead, we could then see a correction of the recent rally. On the downside, the Nifty has near support around 5,900-level, below which the index can drop to 5,850, or extend its losses to 5,750-odd levels.
On the upside, in case, the Nifty is able to break and sustain above 6,020, we could see a rally to 6,150-odd levels.
To sum it up - the Nifty may face some resistance around 6,020. Failure to sustain above 6,020, can trigger a correction to 5,750-odd levels. In case of a positive breakout the NSE index can rally to 6,150-odd levels.