Technically, on its way up, the first resistance for the Sensex is likely to come at 13,763 points, which will be an important resistance level. If the Sensex breaks this level, then it will enter a trading band of roughly 300 points with critical resistance at 14,052 points. It is expected that the Sensex will consolidate between these two levels.
If the Sensex breaks out on the upper level of the trading band, which is at 14,052 points—that has a probability of around 70%—and closes above it, then there could be a sharp upward movement of around 500 points, which may bring the Sensex to its next, and critical, resistance band of 14,553-14,671 points.
However, if the Sensex falls due to any unforeseen circumstances such as political instability following the confidence vote in Parliament, fresh tensions between Iran and Israel, or any setbacks in the earnings of key companies, then the gravity of uncertainty will rule.
In terms of support levels, the Sensex will find its first support at 13,239 points, which is likely to be strong. If it breaks this support, the next support level will come at 13,021 points, which will also be a strong support. If the Sensex closes below this, then there will be trouble as the strong rally seen during the later part of last week will weaken considerably and positive sentiments on the markets will fizzle out.
In Nifty’s case, the first resistance is very close at 4,122 points, and this, being a moderate resistance, is likely to be breached (probability 80%), with the next key resistance expected at 4,217 points. If the Nifty crosses this hurdle, it will face a crucial resistance at 4,327 points. Any close above this level with higher rising volumes would trigger the next leg of the rally, which may take the index to 4,461 points.
On its way down, the Nifty will face its first support at 3,969 points, which is an important support level and should hold under normal circumstances. However, if it closes below this level owing to abnormal circumstances, there will be further fall, which might take it to 3,885 points, and then to 3,827 points.
Among the sectoral indices, the BSE Midcap index is likely to face its first resistance at 5,287points, followed by next resistance levels at 5,348 and 5,526 points, and supports at 5,210, 5,169 and 5117 points. The BSE Small Cap Index may test its first resistance at 6,495 points, followed by resistance at 6,604 points and the most critical resistance at 6,904 points. However, in case the index heads down, the first support is likely to come up at 6,428 points, followed by the next support level at 6,367 points and an important support at 6,296 points.
This week’s dark horse could be the BSE Metal Index, which at 11,668.39 points, has a potential to move up to 12,229 points, though on its way up it may face resistance at 11,805, followed by 11,965 and 12,179 points. The index has a downward potential of up to 11,126 points.
Among individual stocks, Tata Tea Ltd, Aban Offshore Ltd and Bombay Rayon Fashions Ltd look good on the charts this week. Tata Tea, at its last close of Rs733.10, has a target of Rs758, and a stop loss of Rs704. Aban Offshore, at its last close of Rs2,678.55, has a target of Rs2,732 and a stop loss of Rs2,608. Bombay Rayon, at its last close of Rs299.85, has a target of Rs321, and stop loss of Rs275.