Last week, the markets recorded their biggest weekly gain this year, backed by aggressive buying in information technology and private banking heavyweights. As the week progressed, the buying spread to other sectors, as global cues remained favourable. The Sensex ended the week with a gain of four per cent (765 points) at 19,706. The rally was so sharp that the index recovered a major chunk of the losses in February.
Among Sensex-30 stocks, Sterlite Industries and ICICI Bank were the major gainer, rising eight per cent each to Rs 101 and Rs 1,139, respectively. While Larsen & Toubro gained seven per cent at Rs 1,496. Cipla, Hero MotoCorp, HDFC Bank, Wipro, TCS, State Bank of India, Tata Motors, Reliance, HDFC, Tata Steel and Dr.Reddy's rose five to six per cent each. Hindustan Unilever was the sole major loser, falling about three per cent to Rs 438. NTPC and Bajaj Auto ended with marginal losses.
According to the monthly Fibonacci charts, the Sensex has given a strong buy signal on crossing the R3-level (resistance at 19,590). The monthly bias is now likely to remain bullish as long as the index sustains at above 19,590. The next major support level is 19,310. According to the quarterly charts, the index took a sharp U-turn after testing support at the S2 level(support was at 18,750) early this month. As the Sensex gave a monthly buy signal, the next targets would be based on the quarterly charts.
According to the quarterly charts, the targets are 19,945-20,105-20,265, provided the Sensex breaks above 19,725.
The NSE Nifty moved in a range of 289 points. From a low of 5,664, it rallied to a high of 5,953. It ended the week at 5,946, a gain of four per cent (226 points). In the last five trading days, the Nifty bounced back sharply, crossing two important hurdles---the 20-day and the 50-day moving averages. In the near term, the index is likely to see support at 5,850 and the bias is likely to remain bullish as long as the index sustains at above 5,795. On the upside, the Nifty could rally towards the higher end of the Bollinger Band, which indicates a target of 6,007-odd levels. After this, the markets are expected to consolidate, given the sharp rally. The broader range for the consolidation could be 5,800-6,000.
Select momentum oscillators such as the moving average convergence-divergence and the Stochastic Slow have turned positive on the daily charts. However, the average directional index is also quite firm. Therefore, we could see choppy movement next week.
The momentum oscillators on the weekly charts continue to remain in favour of the bears. So, one would do well to wait for another week to get a confirmation of the trend reversal on the weekly charts. The underlying value indicates in case the Nifty sustains at above 5,850, a rally to 6,150-odd levels cannot be ruled out. To sum up, the Nifty has near-support at about 5,850 and the bias is likely to remain positive as long as it holds on to 5,795-levels. On the upside, the index could hit the 6,000-mark soon. Sustained trade at above 5,850 could trigger a rally to 6,150-odd levels. However, be prepared for choppy movement during the week.