The BSE Sensitive Index has moved on expected lines, has collapsed again to stage a smart recovery but needless to say that this hesitant recovery this time around has been on slightly better volume while the negative bias refuses to go away obviously influenced by weak US markets.
The Sensex has received significant amount of support in the proximity of 14600 – 14700 to recover again and close above the psychologically important level of 16000 on a week on- week basis (the week is not yet over) Needless to say that the 14700 level which was until now not an obviously tried and tested valid support level but the importance of which has just been underlined due to the recent market action while this aforesaid level is going to provide significant support on the downside.
The near-term outlook which had come under severe amount of pressure, has once again turned stable and it is now once again looking positive while the next few weeks could be rather important for the fortunes of the Sensex. On the flip side though, the Sensex is expected to run into a host of strong support resistance levels while it will have to overcome (from a weekly point of view) in due course of time - 16341, 16623, 16951, 17292, 17452, 17711, 17983, 18336, 18567 & 18845 if it has to make significant gains.
The Sensex continues to remain above its medium-term support levels of 16142, 15956, 15800, 15300 & 14700 and seems to be in a position to attempt to post a higher top/higher bottom scenario on the daily chart in the extreme near-term. The Sensex has also declined to close below the 55-day exponential average. In the meantime, the Sensex has sustained above its bullish gap on the daily chart 13421.05 - 13479.49, another bullish gap has been formed 14455.49 - 14581.35 – these uncovered gaps are also expected to provide the necessary support in the event of a future decline.
The Sensex has also sustained to close below (for the tenth week in a row) the 55-day exponential average. Volume has declined again (has depreciated a bit compared to the previous week) to maintain above the 5781 crore mark while the market breadth has turned in a market performance with the BSE Mid-cap Index (has closed below the 55-week EMA) showing a market performance in a choppy market to come off its low and has closed in a positive territory at 6174.49 while the BSE Small-cap Index has (has closed below the 55-week EMA) almost done the same to end in a positive territory at 7284.64 on the weekly chart.
Incidentally, the Sensex has sustained below the 55-day EMA (17295.16) on 25.03.08, above the 200-day EMA (17068.09) and below the 55-week EMA, which comes in at 16511.92 indicating a weak medium-term bias for the Sensex.
The BSE Sectoral Indices have mirrored the Sensex's sentiment while this time around there hasn't been a single pocket of disparity - all sectoral indices have ended in a positive territory week on week.
The great Indian bull run continues to flounder with a clear negative direction (a decisive close below the 14700 level could be disastrous) while the near-term outlook seems to have improved a bit, it's the medium-term which remains shaky while the long-term trend still remains bullish.
Source: Dalal Street Journal; P 16; Vol XXIII No. 8; Date:
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