Consolidation continues as traders look forward to RBI monetary policy - Angel Broking

Sensex (19317) / Nifty (5880)

The week began on a quiet note in-line with mixed global cues. On Tuesday, the bellwether indices made a valiant attempt to move above the resistance level of 19500 / 5950 but eventually pared early gains due to enhanced selling pressure near the day's high. Further, in Friday's session a decent bounce was seen from the weekly low mainly on the back of lower-thanexpected November month inflation numbers. Friday's session was the only session during the week to close in the positive territory. Stocks in the Consumer Durables, Capital Goods and Power sectors were beaten the most this week; whereas Auto and Banking sectors defended the market's downfall. The Sensex and the Nifty ended the week with a nominal loss of 0.55% and 0.47%, respectively.

Pattern Formation

- The '20-day EMA' and the '20-week EMA' are placed at 19117 / 5815 and 18480 / 5613 levels, respectively.

- On the weekly chart, we are witnessing a breakout from 'Downward Sloping Trend Line' joining two significant swing highs of 19811 / 5944 (April 2011) and 19137 / 5815 (Oct 2012) at 19050 / 5800 level.

- The 38.20% and 50% Fibonacci retracement levels of the rise from 18255 / 5548 (low on November 20, 2012) to 19612 / 5965 (high on December 11, 2012) are at 19100 - 18930 / 5806 - 5755, respectively.

Future Outlook

We witnessed few ups and downs in the domestic market this week. Broadly speaking, indices oscillated in the trading range of 19613 / 5965 - 19193 / 5839 throughout the week. Indices are now just above the strong support of '20 - Day EMA'. On the other hand, we are now observing that the daily 'RSI - Smoothened' oscillator has given a negative crossover in Thursday's session. In addition to this, the weekly chart now depicts another 'Narrow Range' body formation following last week's candle. Hence, we are of the opinion that if indices sustain below 19186 / 5836 in the coming week, a downward corrective move towards 19100 - 18930 / 5806 - 5755 is in the offing. These levels are the 38.20% and 50% Fibonacci retracement levels of the rise from 18255 / 5548 (low on November 20, 2012) to 19612 / 5965 (high on December 11, 2012), respectively.

On the flipside, last week's high of 19612 / 5965 would act as a strong resistance in the coming trading sessions. Only a move beyond this level would result in an extended rally towards 20050 - 20218 / 6000 - 6070 levels. Considering the overall weekly chart structure we continue to remain positive on the market and any corrective move towards 19000 - 18900 / 5800 - 5750 levels should be used by positional traders as a buying opportunity.

Source : Equity Bulls

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