Chartists see further fall
Technical analysts expect the market to fall further from these levels, before setting out on fresh legs to conquer newer peaks. reports Vyas Mohan.business Updated: Jul 28, 2007 04:05 IST
With the stock market correcting after a four-month breathtaking upward sprint, technical analysts expect the market to fall further from these levels, before setting out on fresh legs to conquer newer peaks.
"This is a much-needed healthy correction. I see the rock bottom for the Sensex at 14,000, though it may find support earlier and bounce back from there. There is immediate support for the Sensex at 14,600," said Prem Daga, a technical analyst.
Daga called the pattern formed by the Sensex and the Nifty on the charts as the Tower Building, and said it had to collapse. According to him, the run-up has been too fast for the markets to gather strength in the middle.
On Friday, the benchmark Sensex of the Bombay Stock Exchange recorded the third highest intra-day fall in absolute terms, dipping 616.63 points, before ending the day lower by 541.74 points, or 3.43 per cent, at 15,234.57. The broader Nifty of the National Stock Exchange ended the week at 4,445.20 points, lower by 174.6 points, or 3.78 per cent.
Analysts are happy that the correction finally happened. They think the market will consolidate at lower levels and carry on the bull-run with renewed strength.
According to the Fibonnacci retracement, a term in technical analysis that refers to the level where a retracing asset price could find support before resuming the journey in the previous direction, the Nifty could find a support at 4,310 and the Sensex at 14,700.
"The market is looking weak. If the Nifty tests its first support of 4,380, it will move down to the 4,310 levels to find a firmer base," said Vinit Birla, technical analyst with Pranav Securities.
According to Sandeep Wagle, chief technical analyst of Angel Stock Broking, "The Sensex could find support around 15,130 and the Nifty between 4,420 and 4,430, from where the indices should ideally bounce back. If those levels are broken, a further drop of 200 points could happen on the Sensex."