5,260 is the pivot point for Nifty

After a positive start to the week, the markets exhibited lacklustre movement on most days and pared gains at close. Eventually, the benchmark indices ended flat. The Sensex, which rallied to a high of 17,920, closed at 17,574, up just four points.



Among index stocks, Wipro slumped nearly five per cent to Rs 391. Jindal Steel, Tata Motors, SBI, TCS, HDFC Bank, NTPC and Larsen & Toubro fell two-four per cent. On the other hand, ONGC soared nearly six per cent to Rs 1,264. Reliance Communications, Hindustan Unilever, Maruti Suzuki, Tata Steel, Cipla, Tata Power, ITC and Hindalco were up two-four per cent.

The Nifty moved in a range of 107 points — it touched a high of 5,367 and a low of 5,260 this week. It settled with a gain of six points at 5,269.

Last week, I had mentioned that the markets will display strength only if the Nifty closes above 5,300. The Nifty closed above 5,300 and thereafter consolidated. Significant stock-specific gains were seen during the week.

Incidentally, the Nifty broke the 5,300 level on Friday, and closed at 5,269. The index has a very near support at 5,260, which is the lower end of the bollinger band. In case the Nifty trades below this for a longer period on Monday and closes below it, we could see a breakdown and the index may possibly test 5,200.

On the positive front, if the Nifty is able to hold on the 5,260 support, it is likely to bounce to 5,320 and attempt a move to 5,370 during the week.

One can look at 5,260 as the pivot point, with support below it around 5,230-5,200. On the higher side, the index will face resistance around 5,310-5,335.

The overall trend remains bullish, although select momentum indicators — MACD and stochastic slow — are showing signs of tiredness. Interestingly, weekly momentum indicators like MACD and directional index have turned positive. Hence, any major downside can be ruled out for the moment.

via BS