Major Indices :: Sensex : 16739 : Nifty : 5037
Intermediate Trend: Sideways
Key Technical Levels: 17271- on the upside, 16781- on the downside
In the previous review, when the Sensex was at 16739, we had stated “the uptrend is intact, the Sensex is likely to achieve target of 17020-225 , probably, in this week itself; any close below 16111 will warrant profit booking; those who have invested on our bullish calls near 14833 must have yielded good returns".
The Sensex moved as per our expectations and hit our target area of 17225 exactly(actual high 17271). The movements were also confined to the parallel channel drawn on the daily charts. Friday's rally of over 400 points, was good set back for the bears, but suspect a 'manipulative' rise rather than guanine buying interest by the bulls. Is it (rally) going sustain further? I am skeptical.
The recent rally could turned out to be a "Trojan horse" in the bulls camp. The reasons for this bearish views are a) The Sensex has already achieved our target with 17% rise in 5 weeks, b) It is (sensex) very close to the upper end of the parallel channel drawn on the daily charts, c) On the monthly charts (see Sensex monthly chart in our report dated 25th March) the Sensex has given a "pull back" rally after a deceive break of the long term support line. The current value of this support line is near about 16800; and one needs a monthly 'close' above 16800 to prove that the rally was not a pull back but a genuine bullish action.
Hence it is profitable to play defensive and "take profit" at this stage of the market and avoid any aggression on the bullish front. The benefit of doubt should be given to the bears than bulls. Any close below 16781 will trigger the bear dominance, once again, and in that eventuality a fall (minimum) upto 16100-16220 looks imminent.
On the positive note, a close above 17271 i.e. yesterday's high, is critical for the bulls. If done on closing basis, the Sensex can flare upto 17400-17660, i.e. upper end of the parallel channel, where expect selling pressure.
On the Global markets, bears may surprise the bulls after a good rise of 12.8% in the Dow Jones, 14.9% in FTSE, 25.7% in HangSeng & 19.6% in Nikkei, since their respective "troughs" in January 2008.
