Both the Nifty and the Sensex were volatile through most of last week as the indices experienced selling pressure at higher levels.

They failed to conclusively close above their key resistance levels. Investors for now, should remain cautious and consider booking profits at higher levels.

A decisive break-out of the significant resistances can take the indices to new highs once again.

Nifty 50 (9,285.3)

The Nifty index marked a new high of 9,377.1 on Friday and fell 0.8 per cent on that very session, forming a short-term key reversal day.

Short-term trend: Over the past seven trading sessions, the Nifty has been struggling to make a strong close above 9,350 levels. Intra-day rallies are experiencing selling pressure around this resistance level.

The index fell sharply and closed below the immediate base level of 9,300, triggered by negative divergence in the daily indicators and oscillators.

The index can test the short-term supports at 9,260 and 9,191 in the coming weeks.

We reiterate that the short-term investors can consider buying in declines as long as the index hovers above 9,191. Having said that, as the index faces selling pressure at higher levels and indicators project trend reversal on the cards, avoid taking fresh long positions on a decisive fall below 9,191 levels.

The short-term uptrend will be altered if the index conclusively declines below the immediate key support level of 9,075. Next supports are at 9,020 and 8,975.

On the other hand, if the index manages to reverse upwards once again following a corrective decline, the subsequent rally can take the index higher to 9,377, 9,500 and 9,600 in the short to medium term.

Medium-term trend

The medium-term trend continues to be up for the index.

As long as the index trades above the key support level of 8,800 there is limited threat of the medium-term uptrend reversing.

But a fall below 8,800 can strengthen the bearishness and drag the index down to 8,700 or 8,650 levels.

On the upside, a decisive break-out of the key resistance in the 9,350-9,377 range can take the index higher to 9,500 and 9,600 levels.

Subsequent, medium-term targets, if the Nifty index moves higher, are 10,037 and 10,854.

Sensex (29,858.8)

The Sensex was choppy over the past week and slumped 0.9 per cent on Friday, bringing it below the 30,000-mark. The index can test the immediate support level of 29,600 and 29,500 in the near term. We reiterate that fresh long positions should be avoided if the index declines below the significant support level of 29,260. Conclusive rally beyond 30,175 can take the index northwards to 30,500.

As long as the index trades above the support level of 27,400 the medium-term uptrend will remain in place. Medium-term targets above 30,200 are 32,455 and 36,404. Supports to watch are 29,000 and 28,500.

Bank Nifty (22,604.9)

Amidst volatility, the Bank Nifty index extended its rally by gaining 1.1 per cent or 246 points last week. However, after recording a new high of 22,853 on Friday, the index fell 0.5 per cent on that session, forming a bearish engulfing candlestick pattern in the daily chart.

This pattern in a short-term bearish reversal. Further, the daily as well as weekly relative strength indices feature in the overbought levels implying possibility of a near term corrective decline.

A fall below 22,300 can strengthen the bearish momentum and pull the index down to 22,000 in the short term. Traders with a short-term perspective should desist taking fresh long positions on such a fall. Instead, go short on a strong fall below 22,300 with a fixed stop-loss. Initial target is 22,000. Strong tumble below 22,000 can pull the index down to the 21,800-21,700 band.

Supports below 21,700 are at 21,500 and 21,400. Conclusive decline below 21,400 will alter the short-term uptrend and pull the index down to 21,000 and then to 20,700. On the upside, a decisive rally above 22,720 can take the index northwards to 22,844 and 23,000 in the short term.

Global cues

The Dow Jones Industrial Average currently tests a key medium-term resistance level of 21,000. Strong upward breach of this hurdle can take the index higher to 21,170 or 21,200 levels. But a decline below the immediate support at 20,850 can pull the index down to 20,750 and then to 20,700.

The European indices such as the DAX, CAC and FTSE 100 have witnessed strong rally last week. The Nikkei 225 index has advanced 248 points or 1.3 per cent in the previous week.

It now faces a key resistance ahead at 19,500. Break-out of this barrier can take the index higher to 20,000 in the short to medium term.

Inability to breach this level, will keep the index moving sideways in the 19,000-19,500 range for a while. Support below 19,000 is at 18,500.

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