| Wkly Tech Analysis: Nifty placed in a strong support zone |
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The
markets registered heavy losses in the holiday-shortened week amid rout
in equities across the globe. The US economy seems to be headed towards
another recession, and fears of defaults in the Euro zone loom larger
than ever before. Sentiment also soured due to the popular fight against
corruption, which, many fear, may lead to a slowdown in foreign
inflows.
The NSE Nifty tumbled 336 points, from a high of 5,132 to a low of 4,796. The index ended at 4,846, with a loss of 227 points.
One can see the resistance moving lower on the Nifty daily charts, if
one draws a trend line from its recent high of 5,702 on July 26. The
immediate resistance for the Nifty is now placed around 4,950. The index
needs to break through this downward trend line to show any sign of
consolidation or recovery.
The markets have been in a downward spiral for the last ten months,
which is precisely the time they took during the 2008 correction.
Secondly, the index is now close to its extremely strong support level
of 4,835, on the weekly and the monthly charts. The Fibonacci time-wise
and value-wise targets, however, indicate a major
bottom somewhere in the next 11 months.
According to the time-wise theory, the next bottom will register
around the 21st month, starting November 2010. This indicates a period
between June to August, 2012.
Similarly, according to the value-wise theory, we should get to a
downside target of around 13,400-odd levels on the Sensex, and 4,000-odd
levels on the Nifty. Hence, it would be interesting to see whether the
Nifty can sustain around the 4,800 levels, and for how long. |
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