Bears cut loose post festive mood - Angel Broking

Sensex (18309) / Nifty (5574)

The week opened on a quiet note in-line with mixed global cues. We had mentioned in our earlier report that failure to sustain above 18886 / 5729 (Sensex/Nifty) is a sign of weakness. Also, all the negative technical evidences came into action once our benchmark indices slipped below 18656 / 5677 levels. As the week progressed, indices continued to decline gradually until the last trading session of the week. During Friday's session, indices faced immense selling pressure near the hourly '20-EMA' and as a result, we witnessed a strong downward move during the last hour of trade. The market has now plunged and closed below the crucial support level of 18393 / 5583. During the week, the Auto, FMCG, Capital Goods and Oil & Gas sectors were among the major draggers; whereas the Consumer Durables counters outperformed our benchmark indices. The Sensex shed 2% of its value during the week and the Nifty lost 1.97% over the previous week's closing.

Pattern Formation

- The '20-day EMA' and the '20-week EMA' are placed at 18630 / 5668 and 18138 / 5505 levels, respectively.

- The weekly 'RSI - Smoothened' is now signaling a negative crossover.

Future Outlook

Despite being a truncated week, our markets have shown a bigger trading range as compared to previous few weeks. The week was dominated by the bears and our benchmark indices breached almost all the intra-week support levels. At this juncture, our benchmark indices have precisely closed at the convergence point of two channels (as shown in exhibit 2). Hence, Friday's low of 18266 / 5559 can be considered as a decent support for our market. However, the weekly 'RSI-Smoothened' oscillator has now signaled a negative crossover. Hence, we are of the opinion that a sustainable move below 18266 / 5559 level would trigger short term pessimism in the market. As a result, our benchmark indices may slide towards 18194 / 5515 (50% Fibonacci Retracement level of the rise from 17250 to 19138 / 5216 to 5815). This level also coincides with the '20-week EMA' and is likely to act as an intermediate support for the market. However, a breach of this level may drag indices further down to fill the upside gap level of 18062 / 5448. On the flipside, in case of a rally during the coming week, indices may face resistance around 18564 - 18751 / 5650 - 5702 levels.

Source : Equity Bulls

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