Further upsides only if 5,405 is taken out on a weekly close, otherwise market is range-bound

Crucial support is pegged at 5,169 points, and as long as the Nifty does not dip significantly below this level, the bulls will sit pretty even if the market drifts for a week or so

S&P Nifty close: 5,284.20




Market Trend

Short-term: Upwards   Medium-term:    Sideways   Long-term: Sideways

The Nifty opened flat for the week and drifted lower to almost close the gap area between 5,196-5,322 points. One should now keep a close watch on the 5,169-point level as the bulls cannot afford the Nifty to drop much below this. After the dip in the first half of the week, as was expected in last week’s report, the Nifty recovered during the last two days to close marginally lower, down 76 points (-1.43%). The sectoral indices which outperformed the market were BSE FCMG (+0.73%), BSE Power (+0.48%) and BSE Health (-0.01%)—while the ones which underperformed were BSE Auto (-3.37%) and BSE Metal
(-2.47%). 

The weekly Histogram MACD remaining above the median line played with the indication that the short term trend remains up and one has to see whether this corrective rise lasts for the next 4-6 weeks, albeit with some hiccups in between.

Here are some key levels to watch out for this week.

  • As long as the S&P Nifty stays above 5,281 points (pivot) the bears will be under pressure.
     
  •  Support levels in declines are pegged at 5,204 and 5,124 points.
     
  •  Resistance levels on the upside are pegged at 5,362 and 5,441 points.

Some Observations

The bulls have put the bears under pressure and needn’t get worried as long as the 5,164 level holds in any correction.

1.    Support in declines is pegged from the recent tops of 5,168-5,169 points.

2.    Further support in declines will be provided by the “gap area” between 4,827-4,861 points.

3.    The 5,405 level is the crucial resistance level (trend-line in lavender) to watch out for this week.

4.    A small top is likely during the first couple of days this week after which a dip could materialise.

Strategy

The Nifty faces stiff resistance at the 5,405-point level (from the weekly trend-line in lavender). Unless and until this is taken out, upsides are limited for the time being. Crucial support is pegged at 5,169 points and as long as the Nifty does not dip significantly below this, the bulls are sitting pretty even if the market drifts for a week or so. Like last week, one should expect a dip mid-week in a curtailed week of trading due to holidays.

(Vidur Pendharkar works as a Consultant Technical Analyst & Chief Strategist, www.trend4casting.com)
 

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