International BusinessMarkets in oversold zone
The markets ended lower for the second straight week as rate hike fears, global cues and futures & options expiry weighed on the sentiment. The Sensex fell below 16,000 for a brief while and touched a low of 15,982. It eventually ended with a loss of 502 points at 16,358.
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Among the index stocks — Tata Motors slumped nearly 11 per cent to Rs 694. Mahindra & Mahindra, Tata Steel, Hindalco, Sterlite and Wipro plunged 8-10 per cent each. Reliance Communications, Jaiprakash Associates, DLF, Hindustan Unilever, ACC and Hero Honda were the other major losers. Sun Pharma, however, gained 3 per cent at Rs 1,426. BHEL and ITC were the only other gainers from the 30 index stocks.
Now that the Sensex has broken the 16,100 support during the week, the trend becomes negative for the next two months as well. The index will have to overcome the 17,470 level to change its quarterly trend. One needs to closely watch the 15,380 level, as a breach of this level may change the long-term trend into negative. In the short term, the 16,900-17,100 range is likely to prove a major hurdle for the Sensex.
However, given the fact that markets are in the oversold zone, one can expect a pullback during the coming week.
Next week, the Sensex is likely to face resistance around 16,700-16,805-16,915. On the downside, the index is likely to find support around 16,015-15,910-15,800.
The NSE Nifty moved in a range of 270 points, from a high of 5,036, the index dropped to a low of 4,766, and finally settled with a loss of 154 points at 4,882.
Momentum indicators such as the Moving Average Convergence Divergence and the Stochastic slow are in the oversold zone, while the 9-day Relative Strength Index and the Directional Index are indicating a pullback in the short term.
The Nifty long-term support is at 4,615, which is its 200-day Daily Moving Average. The Fibonacci retracement of 2009 indicates support at 4,180. Next week, the index may find support at 4,825-4,750-4,715, while it may face resistance around 4,985-5,015-5,050.