As Sensex Sustains Above 17,000

The BSE Sensitive Index has moved more or less on expected lines, has finally slipped into a recovery phase which was anticipated while the strength and size of the recovery have also been on rather expected lines. Two things have contributed to this rather sharp upmove, a deeply oversold situation on the daily chart and secondly and more importantly significantly strong support levels comingin to cushion the Sensex from a further decline.

The short term outlook is in an overbought situation indicating some amount of near term heaviness while the medium term outlook is in a comeback mode and the long term outlook hasn’t changed much and resistance at higher levels continues to be the key issue but the Scnsex has actually managed to sustain above the psychologically important level of 17000. The outlook has now slipped into a positive frame of mind (read as a corrective phase within a corrective phase) and there wouldn’t be any need to review this outlook unless and until there is a clear and decisive breach of the 16610 level until which the short term trend continues to remain up.

The Sensex has appreciated from an intra-day low of 15330.56 posted on 03rd November 2009 to an intra-day high of 17083.20 posted on 16th November 2009 in only 10 trading sessions and though it has closed above its psychological resistance level of 17000, a corrective decline cannot be ruled out while support can be expected at the 16610 mark, a further downside might seem slightly possible. On the upside though, the Sensex is expected to run into a host of strong resistance levels which it will have to overcome in due course of time — 17226, 17739, 18325 and 18930 levels to make significant gains. The Sensex continues to remain above its longer term support levels of 16671, 16214, 15956, 15734, 15576, 15303, 15100, 14700, 14400, 14071, 13800, 13345, 12801, 12316, 11800 and 11300. Volume has declined once again to maintain above the 4400 crore mark while the market breadth - has turned in a market performance with the BSE Mid-Cap Index showing a market performance in a good market to come off its low and has closed in positive territory at 6491.80 while the BSE Small-Cap Index has almost done the same to finally end in positive territory at 7499.83 on the weekly chart.

Incidentally the Sensex has sustained above the 00 Day Exponential Moving Average (15625.39) on Monday 16th November 2009, above the 200 Day Exponential Moving Average (14521.01) and above the 55 Week Exponential Moving Average, which comes in at 13877.67 indicating a slightly stable medium term bias for the Sensex. The BSE Sectoral Indices have mirrored the Sensex’s sentiment while this time around there has been a single pocket of disparity — all the sectoral indices have ended in positive territory week on week.

The Sensex is expected to run into stiff resistance at the 17226 level while a sustained closing above this aforesaid level could set the setting for a smart upside.