Indian equity prices shuffled along in an aimless manner last week. Most investors were focused on developments overseas making stock prices surge and ebb along with global news. The Sensex and the Nifty closed flat for the week.

The unrest in Egypt that sent crude prices above $100 a barrel caused a bout of volatility in the early part of the week. But nerves were assuaged after the Bank of England and the European Central Bank assured investors that winding down the quantitative easing programme was not imminent.

Data showing that 195,000 jobs were added in June in the US made stock markets there happy. But such indications of strengthening US economy also leads to the fear of stimulus programme tapering to an end.

The yield on 10-year US Treasury note moved up to 2.72 per cent on Friday as investors sold bonds anticipating lower demand for these in future.

News of foreign institutional investors halting their equity sales was also a positive for our market last week.

They have net purchased stocks worth $176 million so far in July. But FIIs have pulled out $753 million from debt, maintaining pressure on the rupee.

Oscillators in the daily chart are moving sideways, but in the neutral zone. Weekly oscillators are also lingering in the neutral zone implying that a sharp break is possible in either direction.

Sensex (19,495.8)

The Sensex reversed lower from Monday’s high to hit the intra-week low at 19,147 only to reverse again and move back towards its previous high. The index is tantalisingly moving just above its 50 and 200 day moving averages.

Despite the Sensex being unable to move past the short-term trend deciding level at 19,688 indicated last week, there is no sharp downward reversal either.

For the week ahead, it is to be seen if the Sensex is able to hold above the support at 19,140. If this level holds, it will imply that the short-term rally will continue to take the index higher to 19,845 or 20,278 in the weeks ahead.

But move below 19,140 will mean that the index can decline to 18,900 or even 18,467.

Our medium-term view remains unaltered. There is critical medium-term support in the zone between 18,000 and 18,500 and investors need to throw in the towel only if the 18,000 level is breached. Subsequent supports are 17,540 and 17,160.

Nifty (5,867.9)

The Nifty too gyrated in a narrow band before closing 26 points higher last week. It could not get past the first resistance at 5,910 and rebounded from 5,760.

Traders can hold their long positions with stop-loss at 5,750. If the index holds above this level, it can move higher to 5,966 or 6,094 in the days ahead.

But break below 5,750 will drag the index lower to 5,734 or 5,694.

The short-term view will stay positive as long as the index holds above 5,694.

Breach of this level will mean that the index could decline to 5,570 or 5,492. The 5,500 level needs to be breached strongly to usher in a further fall to 5,380 or 5,180.

Global Cues

Most global indices moved a step higher last week as risk-aversion abated slightly. The CBOE volatility index also closed almost 11 per cent lower.

The Dow went on to close 226 points higher. We stay with the view that the medium-term trend will turn negative only if the index goes on to record a strong weekly close below 14,356.

Short-term resistances are positioned at 15,200 and then 15,550. As written earlier, the index could spend a few more weeks moving in the range between 14,500 and 15,500.

Crude gave everyone a scare by spiking almost 7 per cent. Light crude futures on NYMEX closed at $103.2. Break above the critical $100 mark now sets the stage for the up-move continuing to $110 or $115.

But crude prices are moving sideways in a range between $80 and $110 since 2011. The upper end of the band needs to be crossed to indicate that a fresh leg of the long-term up-move from 2009 low has begun. Target on break above $110 is $124.

Dollar in demand

The US dollar spiked higher on strong jobs data on Friday. The dollar index gained 1.5 per cent last week to close at 84.7. Key medium-term resistance for index is at Rs 83. Since the index has recorded a strong move above this, it can now move on to 89.

The long-term trend deciding level for the index is however at 89. The index reversed twice from this level in March 2009 and again in June 2010. Strong close above this level will pave the way for move to 96 or 101. It may be recalled that the dollar index is in a long-term downtrend over the last two decades. The path of least resistance for this index remains downward. It is quite likely that the index reverses from the 90level again and continues moving in the trading band between Rs 73 and Rs 90 established since 2008.

>lokeshwarri.sk@thehindu.co.in

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