The support zone was not touched last week as the BSE Sensex remained above the previous weeks closing of 16191. The low of 16167 last week was only for a few minutes as it traded the whole week above 16191. Subsequently, it crossed the resistance of 16553 to violate the short seller stop loss and closed lower. The key point for the time being is that the support was not violated. The pull-back levels were 16485-16705 and the high registered last week was 16669.25.
Last week, the Sensex opened at 16191.32 attained a low at 16167.13 and moved up to 1669.25 before it finally closed the week at 16429.55 and thereby showed a net rise of 237 points on a week-to-week basis.
Immediate support is in 16167-16011 range and on a fall below it, expect 15600-15300, which holds the bull castle at the moment.
The Union Budget 2010-11 presented on Friday, 26 February 2010, unleashed some intra-day triggers that took the Sensex past 16553 but closed below it at 16429.55. Therefore, the immediate resistance range now becomes 16553-16669. The pull-back will continue on a further rise and close above 16710. If that happens, expect the rise to get extended towards 16952. The budget was an intra-day trigger but the Sensex lost 50% of the gains recorded. This week will witness the actual action and discounting of the budget based on its likely implications. If the support of 16167-16000 is violated, it will mean that the budget week's low was violated, which will give out the message that it will be good only when it comes into existence. Market can fire up if a sustained rise and close above 16710 is witnessed by the end of the week.
Attempts to move higher towards 16703 and 16952 could be witnessed. Failure to sustain at the higher range can take the market down to test back the low of 15651.
Our view that a pull-back of the fall from 17790 to 15651.99 is in progress still holds. Now what needs to be seen if the Sensex can sustain in the higher range.
The Broad Market
The BSE Mid Cap index support continues to be at 6300-6275. A fall and close below 6275 can take the BSE Mid Cap tumbling down. A rise and close above 6788 can bring about near term rally.
The BSE Small Cap index has support at 8104-7776. A fall and close below 7775 can bring about a slide in the BSE Small Cap Index.
Resistance is at 8690. A breakout and close above 8700 will bring about continuation of the rise.
Both BSE Mid Cap and BSE Small Cap have formed a pennant on weekly charts. A breakdown below the support levels can bring about a sharp slide.
Conclusion
The Sensex recovered on Friday to test the pull-back levels but how long it will sustain in the higher range remains to be seen.
Strategy for the week
Exit long on rise to 16705 and 16952 as the opportunity arises. Keep stop loss of 16000 to hold long positions.
Happy Trading,
United we grow!!!
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