Market may bounce back

The markets bounced back sharply in the last two days of the trading week, mainly on account of short-covering in banking stocks, as the US markets rebounded. Realty and energy stocks logged smart gains.

The Nifty hit a fresh calendar low of 3,790 (close to the support level of 3,770 mentioned last week) and then pulled back to higher levels. The buying momentum was so strong that the index zipped past the 4,000-mark to a high of 4,118. The index finally settled with gains of 43 points at 4,092.

The Nifty MACD (moving average convergence divergence) and Stochastic Slow indicate more upside. The index could re-test its recent high of 4,215. If it sustains above this level, one may see the 4,500 level in the medium term.

The index closed above its short-term moving (20-days) average (4,064) after a gap of 41 days. The medium-term (50-days) moving average is 4,492. Going forward, the 3,850 level will be crucial. The Nifty may see a further upside as long as it trades above this level. But a dip below the mark could take the index up to 3,400-3,250.

The Nifty is likely to find support around 3,965-3,930-3,890, while it may face resistance around 4,215-4,255-4,295 this week.

The Sensex moved in a range of 1,170 points - from a low of 12,514, the index rallied to a high of 13,684 and finally ended with gains of 165 points at 13,635.

Among the index stocks, ONGC and Maruti soared 11 per cent each. Larsen & Toubro, Bharti Airtel, NTPC, Reliance Infrastructure and SBI gained 6-8 per cent each. On the other hand, Ranbaxy slumped 18 per cent to Rs 531, and Satyam, Wipro, Tata Steel, Hindalco and Infosys dropped 8-14 per cent each.