Comment

The week gone by witnessed nervousness as unwinding was evident at higher levels. However, there was some bear-covering and fresh buying at the end of the week, which saw the week ending with net gains over the previous week. The charge was led by the CNX IT index as weakness in rupee saw concerted buying in technology stocks. Banking and mid-cap stocks brought up the rear. The Nifty gained Rs 45,989 crore in market capitalisation on a week-on-week basis.

FIIs were net investors during the week with inflows to the tune of Rs 1,461.10 crore, which also boosted sentiments towards the end of the week. Rupee ended the week at 46.64 levels against 46.34 levels seen in the previous week as overall sentiment was nervous.

The Dow Jones Industrial Average (DJIA) was a net gainer, though it came off its intra-week highs. The Nasdaq Composite ended about 1% lower and the UK FTSE 100 index also slipped as profit sales eroded early optimism.

I had advocated a level of 10500 on the DJIA on the basis of an inverted head-and-shoulders pattern a few months ago and the benchmark tested the 10438 level last week, which almost completes the primary target. If the bullishness persists, the 11000 level is possible by March 2010, though the proposition is difficult as upsides from hereon maybe calibrated.

Technically, markets have shown feeble strength as immediate tops remain inviolate and unless these levels are overcome forcefully, fresh upsides are unlikely.

Momentum players may go long above the multiple resistance level of 5085 on the Nifty spot. The 5185 level remains a more meaningful resistance and unless overcome, positional players are unlikely to buy whole heartedly.

The weekly range advocated for the Nifty last week, between 5150 and 4640 levels, has held as the index trended within these parameters. This week may witness a range of 5175 on advances and 4840 on declines.

The bullish pivot will be at the 5025 levels and the bearish pivot at 4950 levels. Capital preservation should be the priority of traders now.