We are witnessing is only a corrective rise. A move to the 5,065-5,131 points’ area would provide another excellent selling opportunity from a trend perspective

S&P Nifty close: 4,920

Market Trend

Short Term: Down Medium Term: Down Long Term: Down

The Nifty opened flat and declined to test the S1 level of the week (4,801). It survived above last week’s low and recovered smartly during the weekend to close near the high of the week. In the process it has closed with a marginal gain of 29 points (+0.59%) albeit on significantly lower volumes. The bulls heaved a sigh of relief after the drubbing of the last four weeks.

The sectoral indices which outperformed were CNX PSU Bank (+2.50%), CNX Finance (+1.91%), CNX Realty (+1.34%), CNX Energy (+0.88%), CNX PSE (+1.72%) and CNX Infra (+0.88) while the gross underperformers were CNX FMCG (-2.24%), CNX MNC (-1.60%) and CNX Consumption (-1.04%). The weekly histogram MACD remained below the median line but turned slightly up raising the hopes of this recovery lasting a bit further.

Here are some key levels to watch out for this week

– As long as the S&P Nifty stays above 4,894 points (pivot) the bulls can breathe at bit easy as the bears might have become a bit exhausted after the relentless hammering of the last four weeks.

– Support levels in declines are pegged at 4,830 and 4,741 points.

– Resistance levels on the upside are pegged at 4,983 and 5,045 points.

Some Observations

1.The Nifty is facing stiff resistance in the 5,135-5,185 area which has to be taken out in close for the bulls to be shaken.

2.Weekly averages remain negatively phased implying that the bears are in control and immediate bottlenecks are pegged at 4,983, 5,045 and 5,125 (optimistic scenario) this week.

3.For a very short-term reversal the previous week’s high (4,957 points) has to be crossed in close, otherwise the bears continue to rule the roost.

Strategy

The bulls survived a scare as the Nifty endured above the previous week’s low of 4,788 points. The recovery during the weekend saw the Nifty come very close to the recent tops around 4,957 points which has to be taken out in close for further upsides. However this will not change the overall trend of the market which continues to be down. Resistance levels in the current recovery is pegged at 5,000 (38.2%), 5,065 (50%) and 5,131 (61.8%), retracement of the recent fall from 5,342-4,788 points. What we are witnessing is only a corrective rise and it has to be seen whether it takes out the immediate resistance of 4,957 (in close) to continue further to the above-mentioned resistance levels. A move to the 5,065-5,131 points’ area would provide another excellent selling opportunity from a trend perspective.

(Vidur Pendharkar works as a consultant technical analyst & chief strategist at www.trend4casting.com)