Markets

Last week, the Sensex opened at 15694.41 attained a low of 15573.03 and moved up to a high of 16570.57 before closing the week at 16481.20 and thereby showed a net rise of 728 points on a week-to-week basis. The Sensex tested the upper range of 16500 and closed around it. The candle movement was strong and significant.
Expect resistance at 16683 and 16892. Weekly support will be at 16208, 15845 and 15573. If the resistance levels of 16683 and 16892 are crossed and the weekly close is above 16892, then expect the pull back to get extended towards 17642 at least to 18426 to an outer extent. The 0.382, 0.500 and 0.618 levels of the fall from 21206 to 14677 is placed at 16892, 17642 and 18426.
A fall and weekly close below 15573 will take the Sensex back to test 15300. If the level of 15300 is violated and the close is also below it, then expect a sustained fall to violate 14677 and move down towards 14100 at least.

The markets displayed a positive range bound trend amidst intermediate bouts of volatility. Sustained and broad based buying was witnessed amidst positive breadth of the market and higher volumes in truncated trading last week. Traders and speculators were seen building fresh positions after bellwether Infosys results. However, they were also seen booking profits at higher levels and also building fresh short positions. FIIs remained net sellers in the cash segment but were net buyers in the derivatives segment, albeit they were also occasional sellers. Mutual Funds also remained net buyers during the course of the week.
Selling pressure was evident at higher levels as the market sentiment was still tentative. Global cues have remained mixed with crude oil once again spiking due to less inventory data. Global markets more or less remained positive although the US economy continued to emanate mixed signals with fears of recession still present and inflation numbers continue to concern India. The volumes recorded have improved along with fund flows. Now, it is important that the corporate results meet market expectations to improve the market sentiment as happened with Infosys when no shocks emerged and improved the sentiment of the severely beaten IT stocks.
In the meanwhile, the markets are likely to take cues from the global markets, crude oil prices and the inflation rate, which declined last week. The market trend is likely to remain volatile ahead of the derivatives segment expiry on Thursday.
On the upside, the Sensex faces resistance at the 16608 level but has support at the 16,372 and 15,699 levels. On the upside, the Nifty faces resistance at 5025 and 5156 levels while 4899 and 4647 are its important support levels.

Traders and speculators can buy Alstom Projects with a stop loss of Rs.642 for a target price of Rs.751.

Conclusion :
Higher range of 16892 to be tested or it can move higher as well but sustainability at higher range can once again be the issue.

Strategy for the week :
Exit long positions on rise to pull back levels of 16892-17642.


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