Fair gains for indices

The stock markets exhibited high volatility last week albeit in a narrow range as the bulls and the bears tried to get the upper hand. The eventual result, however, remained inconclusive despite the major indices finishing with decent gains.

The Sensex dipped below the psychological 14,000-mark to touch a low of 13,947, but bounced back smartly and rallied to a high of 14,327 — a recovery of 380 points — before settling with a gain of 99 points at 14,163. Last week, we mentioned that the key support for the index was in the 13,900-14,000 range. On the positive side, the index did not close below the 14,000-mark during the week.

Going forward, one needs to carefully watch the support zone for change in the trend. If the support zone is violated, one may witness a steep fall of another 800-900 points. In case of an upmove, the Sensex is likely to face resistance around 14,300, above which, the index can rally up to 14,540.

The Nifty also managed to hold its key support level of 4085. The index touched a low of 4,101, and then bounced back to a high of 4209 — a swing of 108 points. The index finally ended with a gain of 26 points at 4171. The Nifty is likely to face stiff resistance around 4,225 levels, above which, the index can rally to 4,300. On the downside, the 4,085-4,100 zone will be the key support area for the index.

A break of this level can see the index shedding another 250 points.

Among stocks, Infosys not only managed to cross the Rs 2,000-mark but was also successful in closing above it at Rs 2,009. This week, the stock may move in the range of Rs 1,965-2,045.

ITC also managed to hold the support level of Rs 150. If the stock continues to hold the support zone, and manages to clear the resistance zone of Rs 155-158, it can move up to Rs 165 in the near term.

Reliance continues to face selling pressure above the Rs 1,700-mark. One may see further weakness in the stock below Rs 1,670. Major support for the stocks exists around Rs 1,500.