Banking on a firmer ground

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: Terror struck again and our markets failed to rally like most of the markets around the world. The markets were closed on Thursday as the Sensex ended 2.0% higher and the Nifty gained 2.29% in the last week. Among the sectors, the BSE Realty sector continued to take a beating, as the BSE Realty index was the largest loser ending 5.13% lower and was followed by the BSE Capital Goods index, which lost 2.58%. On the bullish side, we had the CNX IT sector gain 5.22% and was the largest gainer and was followed by the BSE Power sector, which gained 2.71%.

Though the indices have seen marginal gains in the last week, they have just stayed sideways as the Sensex has been staying between 9,182 on the upper side and 8,649 on the lower side. The Nifty has been staying between 2,633 and 2,791 in the last week. A move out of the trading range will result in the indices starting a trending mode. A breakout on the upper side could be expected in the coming week after the army flushes out the terrorists, possibly by Friday night or Saturday morning, we may see the indices moving higher and starting a rally like most of the markets around the world. On the other hand, if the indices were to drop below the lower supports, than we could see a retest of the lows made on October 27.

The first resistance level for the Sensex is at 9,430 and for the Nifty it is at 2,825 and once the indices close past these levels, we could see higher levels to 10,700 and 3,160 respectively. The targets for the Sensex and the Nifty to get back into an intermediate uptrend are far away and are at 10,571 and 3,161.25 respectively, the equivalent level for the CNX Mid Cap index to get back into a fresh intermediate uptrend is at 3,867.50.

On the weekly charts, the Sensex has a resistance at 11,800 and 12,350 and the Nifty has a resistance at 3,515 and 3,725. Thus, only after the indices are able to cross the resistances on the daily charts, these resistances will come into play. As these are dynamic resistance levels, these levels will move lower as time passes and I will indicate new resistance levels in the next week.