Wkly Tech Analysis: Nifty slips below 20-day DMA he BSE benchmark index touched a high of 20,204

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Rajesh Desai

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Feb 2, 2013, 11:35:38 PM2/2/13

Wkly Tech Analysis: Nifty slips below 20-day DMA

he BSE benchmark index touched a high of 20,204

Rex Cano / Mumbai Feb 03, 2013, 00:50 IST

The Sensex scaled to a fresh two-year high, riding on a dual rate cut by the Reserve Bank of India. The BSE benchmark index touched a high of 20,204. However, as the week progressed, it soon pared gains and slipped into the red. It ended the week at 19,781, a loss of 322 points.

Among the Sensex-30 stocks, Coal India and Cipla surged about four per cent each to Rs 356 and Rs 414, respectively. ITC and Hero MotoCorp rallied about three per cent each. Bharti Airtel slumped about eight per cent to Rs 331. Tata Motors, Larsen & Toubro, State Bank of India, Jindal Steel and HDFC Bank were the other major losers.

The weekly, monthly and quarterly Fibonacci charts indicate strong support for the Sensex at 19,500-19,400 levels. In case the BSE index slips below 19,400, we could see a sharp correction to 18,900-18,500 levels in the near term. On the upside, the Sensex has to sustain above 19,950-odd levels for a fresh up-move.

The NSE Nifty moved in a range of 129 points. From a high of 6,112, the index slipped to a low of 5,983. It ended the week at 5,999, a loss of 76 points.

The NSE index has slipped below the short-term (20-day) daily moving average for the first time in about two months. Key momentum oscillators such as the moving average convergence-divergence, the 14-day relative strength index and the Stochastic Slow are all in favour of the bears. Therefore, the index could see further downward pressure.

On the downside, the index could test the lower end of the Bollinger Band on the daily charts---5,950-odd levels. The next support would be at about 5,935---the 50-day daily moving average.

The weekly charts show a slightly grim picture. The relative strength index has shown negative divergence. According to the weekly charts, sustained trade below 5,950-odd levels could trigger a slide to 5,820-odd levels.

To sum up, the Nifty is likely to seek support at 5,950-5,935. Sustained trade below 5,950 could trigger a slide to 5,820. On the upside, for a fresh up-move, the index has to bounce back to levels above 6,028.