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Taking cues from the global markets, both the Sensex and the Nifty crafted a sturdy opening on Monday, gaining 2 per cent apiece.
The Sensex advanced 387 points and the Nifty surged 119 points during that session. But November derivatives expiry could have prompted investors to take some profits off the table, with indices forgoing some of their earlier gains. But on Friday, market resumed its upmove rising almost 1.5 per cent on anticipation that domestic institutional investors (DIIs) could have turned buyers fuelling a rally.
In effect, the Sensex and the Nifty surged 2.8 per cent and 3 per cent, respectively, for the week, snapping their three-week decline.
The GDP growth for the September quarter, at 4.8 per cent, indicating signs of recovery can support the market in the week ahead.
Auto sales numbers are also due next week. Foreign and domestic institutional flows should be watched cautiously.
The GDP growth remaining under 5 per cent for the fourth straight quarter is, however, a bit worrisome. The rupee hovering around 63 without any major action over the past two weeks also rings a cautious note. Any major move below 63 could trigger outflows.
After recording its all-time high earlier in November, the Sensex was volatile and closed the month with a decline of 1.7 per cent. The 50-share Nifty is yet to record its new all-time high, and fell 1.95 per cent in November.
The 10-day price rate of change oscillator has recovered from the negative zone and entered the positive terrain implying buying interest. The relative strength index in the daily chart has started climbing higher in the neutral region and is likely to enter the bullish zone. The weekly relative strength index too, is charting higher indicating a positive bias. The daily moving average convergence divergence oscillator is about to reverse higher, testing the zero-line. The weekly oscillator is featuring in the positive terrain, indicating the medium-term uptrend is not under threat.
Sensex (20,791.9)
Taking support around 20,161, the Sensex bounced early last week. It extended its gains over the week to 574 points. The index closed above the 50- and 21-day simple moving average levels. Though the rebound has surpassed the initial resistance at 20,650 mentioned in the last column, the index remains below the next key resistance at 20,940. To alter the negative short-term view, the index has to decisively close above 20,940.
In that case, the index can move to 21,240 and then 21,321. Failure to surpass the resistance will confine the index to moving sideways in the range between 20,161 and 20,940 in the near future. Important supports are at 20,600, 20,217 and 20,161. A strong fall below 20,161 can pull the index down to 19,840 and 19,398.
Decline below 19,840 is required to diminish the positive medium-term view. However, if the index continues to stay above this level, it will mean that the prospect of recording a new high in December remains open.
Nifty (6,176.1)
The Nifty bounced strongly, cushioned by key support at 6,000. The index surged 180 points, breaching its 50- and 21-day moving averages in the previous week. Nevertheless, it is currently facing significant resistance at 6,215 level.
An emphatic upmove beyond this resistance will imply that the short-term trend has turned positive. The index can trend northwards to 6,300 and 6,350.
Traders can initiate fresh long positions in that scenario. But failure to do so will shackle the index to trading in a wide range between 6,000 and 6,215 for a while.
Key supports are seen at 6,100 and 6,000. Supports below 6,000 are at 5,924 and 5,982.
Global cues
The Dow and S&P 500 continued their uptrend staying above 16,000 and 1,800 levels, respectively; however, both notched up only marginal weekly gains.
The key short-term supports for the Dow are at 14,727 and 13,874. The trend will stay positive as long as the index hovers above the first support. The medium-term targets remain at 16,471 and 16,688.
The Nikkei 225 Index rose 280 points or 1.8 per cent in the previous week, prolonging its medium-term uptrend.
The short-term trend is also positive for this index.
Key support is pegged at 14,800 and resistance at 15,942.
In commodities, gold is testing an important support at $1,250 an ounce. A strong fall below this level can pull it down to $1,200 in the coming weeks. It has significant resistances at $1,270 and $1,300.
Light crude declined $2 or 2.2 per cent to close at $92.7 a barrel. The short-term trend is down and will remain so as long as it trades below $101. Key support is at $90 and resistance at $96.
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