Past record is no guarantee of future performance, so goes the famous MF rider. For the Sensex, past records can turn out to be stumbling blocks of the future.
Analysts say indices will face resistances at earlier tops
MUMBAI: Past record is no guarantee of future performance, so goes the famous MF rider. For the Sensex, past records can turn out to be stumbling blocks of the future.
Analysts feel the index will face stiff resistance at its earlier tops, which it had touched recently, before plunging on the back of a global sell-off. Though it came back strongly on Monday with a 700-point rally, the road ahead may not be as smooth.
VK Sharma, director, Anagram Securities says, “Yesterday’s bounce was a one-off because of the BJP winning the Gujarat elections and the view that there will not be any early elections at the Centre. Now if the indices have to go to make new highs, they will face stiff resistance at the earlier tops.” Siddarth Bhamre, of Angel Broking agrees.
He feels the market would not touch new highs as there is some resistance around the 6,200 levels. “Though we are not very negative on the market, around 6150-6200, one has to be cautious as people may go short on these levels,” he says.
Gurudatta Dhanokar of Almondz Global Securities says that, for the Nifty to get to the 6200 levels, the 6075 levels will be key. “Now, 6075 is my next target. If the Nifty crosses 6075 by opening bell tomorrow will decide the market close for the December series. If it does, then we may see the 6200 levels, where we may see some selling. If it doesn’t cross 6075 in morning trade, we might see a 100-150 point fall.”
Guru sees chart patterns in some heavyweights like NTPC, RIL, L&T and Bhel are showing short-term positiveness.
“Short positions were formed in the heavyweights and Nifty during last week’s fall. These shorts are holding on till now. We were expecting the Nifty to stay below 5900. Now that it has closed above it, this level could act as a support,” Siddarth adds.
But the Angel analyst feels not many would go short with the global cues turning positive and the sentiment that UPA government would serve out its full term.
“This is largely a traders’ market, which is not going to run away and make new highs. However, aggressive traders may choose to remain long in some heavyweights.”
Rollovers of December series are smooth, feel traders. Yogesh Radke of Edelweiss Securities says, “Since Tuesday was a holiday, we saw above average rolls on Monday. There were significant rolls on the long side. With two more days left, we feel the rollover should be smooth.”
Radke feels the next strong market move will begin once the FIIs are back from their holidays. Most analysts agree that their arrival could trigger another rally. Sudhanshu Pandey, technical analyst, LKP Securities, feels that the chances of going wrong is very high if one takes a very short-term view, given the volatility. He feels the market looks poised for a new high and that the Sensex is likely to hit 21000 and may test 22500.
“Basically, we have seen the market bottom out in the last few sessions, the new highs (21000 and 22500) could be seen somewhere by end January or early February. Once these levels are breached, the markets might start showing weakness and if the money flows stop, things could get catastrophic.” VK Sharma is looking at 20500 on the Sensex first. “It will be the next level to watch on the Sensex. The overall market looks positive because the momentum is good. But from the point of view of fundamentals, the valuations are expensive.”
n_subramanian@dnaindia.net
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