Last week, the Sensex moved in an extremely narrow range of 553 points, between a high of 9,183 and a low of 8,649. The index, which witnessed undecided activity in the first two trading days, bounced back smartly on Wednesday to close with a gain of over 300 points.
While the markets remain closed on Thursday, following the terror attacks in Mumbai, the index on Friday made a steady progress to 9,093, up 178 points for the week. However, in the process, the Sensex has ended lower for the third straight month, down 695 points in November.
The broader view for December suggests that if the index is able to sustain above 9,435, it may move up to its next resistance level of around 10,200 and 10,730, respectively. On the downside, the index has a near-term support around 8,680, below which the index may slip to 8,125. While the sentiment continues to remain subdued, a 15-18 per cent rally up to 10,730 cannot be ruled out.
Market analysts expect a technical rally next week, if the Nifty manages to sustain around 2,700 and close above the 2780-level. F&O participants are anticipating a pullback next week and this was indicated by short positions they covered on the expiry day of the November series and initiated long positions in the Nifty and key stock futures.
Foreign institutional investors (FIIs) were net buyers in the Nifty futures throughout the last week. They squared off short positions on the last day of expiry.
Bottom line:
Buying of 2,800-3,000 calls and selling of 2,400-2,700 puts suggest that the derivatives participants expect the index to move in a wide range of 2,400 to 3,000 with support at 2,400 and resistance at 3,000. However, even if the index manages to move above the 3,000-level, it will face strong resistance at 3,200.
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