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Wkly Tech Analysis: Nifty has broken past major hurdles

Rex Cano / Mumbai Feb 05, 2012, 00:14

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The markets continued to rally for yet another week, driven by liquidity. The Foreign Institutional Investors (FIIs) so far this year have pumped in over Rs 15,000 crore. The Sensex, which, witnessed some choppiness in the first half of the week, rallied firmly in the latter half as FIIs stepped up the buying.

The BSE benchmark index rallied to a high of 17,630, and finally settled with a gain of over two per cent at 17,605. In the process, the Sensex has around 13.5 per cent so far in this calendar year.

Among the Sensex stocks this week, DLF zoomed nearly 9 per cent to Rs 230. Tata Power, Hero MotoCorp, Hindalco, TCS, Sun Pharma, Jindal Steel, Gail India, HDFC Bank and Bajaj Auto were up 5-8 per cent each. On the other hand, Coal India, BHEL and Larsen & Toubro were the major losers.

Last week, the Sensex gave a positive breakout on the quarterly charts, and now has crossed its first major hurdle of 17,565 on the yearly charts. This indicates further bullishness for the markets. Now, the overall trend for the markets is likely to remain up as long as the Sensex trades above 16,500-16,600. The immediate support for the index would be around 17,170.

As per the monthly Fibonacci charts, the Sensex may now target 17,920 in the short-term, while face resistance around 18,150-18,370 on the upside. The NSE Nifty moved in a range of 258 points, the index from a low of 5,077 surged to a high of 5,335. The index ended with a gain of 2.3 per cent at 5,326.

The Nifty has now cleared two major hurdles in form of the 50-WMA and 200-DMA. The index has now settled above the 200-day DMA (Daily Moving Average) for three successive days, which now strengthens the up move. The index has also closed above the 50-WMA (Weekly Moving Average) - which is at 5,255. The 200-day DMA, at 5,190, and the 50-WMA will now act as an immediate support for the index.

The momentum oscillators continue to remain bullish on both the daily and the weekly charts. Hence, one should expect fresh buying on dips. The upside resistance for the Nifty could be around 5,370-5,400. Next week, the Nifty can rally to 5,425-5,485 on the upside, while may seek support around 5,225-5,165 on the lower side.