Expect higher range with volatility: Hitendra Vasudeo

Technical Analyst, Hitendra Vasudeo:

Last week, the Sensex opened at 19689.09 and maintained the same as the low of the week. It moved up to register a high at 20126.55 and finally closed the week at 20039.03 and thereby showed a net rise of 375 points on week to week basis.

The resistance of 19811 was crossed and it closed above it on the weekly chart, which indicates that a rise towards 20444 is likely.

The 61.8% projection of the rise 15748 to 19137, from 18255 is placed at 20353. The 88.6% retracement of the fall from 21108 to 15135 is placed at 20444. The next target range can, therefore be 20353-20444

Weekly support will be at 19951-19776-19596. Weekly resistance will be at 20214-20651.

RSI on the weekly chart once again tested the overbought zone and henceforth violation of the support of 19596 may trigger a reversal on weekly chart. The MACD is moving higher and is above its average and zero line. The Stochastic is in the overbought zone and can provide intra-week correction but reversal can be seen below 19596 on a weekly closing basis.

BSE Mid Cap Index

BSE Mid Cap index lost ground last week as the Sensex moved higher. BSE Mid Cap closed flat with just 8 points gain whereas the Sensex showed gains of 375 points.

Further mid cap rally may continue above 7400.

BSE Small Cap Index

BSE Small Cap index was negative on week to week basis and the Sensex was up to make a new high in the current rally. Therefore, a further rise in small caps may be seen above 7700.

However, selective outperformance of mid cap and small cap stocks may be seen but collectively the index may remain an underperformer in relation to Sensex/Nifty based/large cap stocks.

Conclusion

Rise to continue with intra-week volatility.

Strategy for the week

Hold long positions with a stop loss of 19500. Corrective dips to weekly support of 19951-19776 can be used for buying with a stop loss of 19500. Profit booking at 20444 or above could be undertaken.