Mumbai: The markets rallied strongly on Wednesday owing to positive global cues and huge short-covering in banking shares ahead of monthly futures & options expiry tomorrow. The sentiment was also aided on hopes that economic activity may pick-up world-wide as more and more countries re-open businesses.
The BSE benchmark index, the Sensex, opened 180-odd points higher at 30,793, but soon slipped into the negative zone and touched a low of 30,526.
The BSE index, thereafter, rebounded and steadily climbed to fresh highs in the first half of the trading day. The buying activity gained momentum in the second half of the trading day as a result of which the Sensex surged to a high of 31,661 – up 1,135 points from the day’s low. The Sensex finally ended on a strong note at 31,609 – up 996 points.
Among the Sensex 30 stocks, Axis Bank zoomed 13.5 per cent followed by ICICI Bank up 9 per cent. HDFC Bank, IndusInd Bank, Bajaj Finance, Kotak Bank, SBI, HDFC, Infosys and TCS were the other significant gainers – up 3-6 per cent each. On the flip side, Sun Pharma and UltraTech Cement declined around 1.5 per cent each.
After an inconclusive start to the week, the Sensex has now given a strong buy signal on the weekly Fibonacci charts. Which means that, the bias for the remainder of the week is likely to remain positive as long as the BSE index sustains above 30,950-odd level? Today, in trades the BSE index crossed the weekly R3 (resistance) placed at 31,465 – thus giving a strong buy signal.
On the upside, the next logical target for the Sensex could be 32,310-odd level as per the monthly Fibonacci chart. On Thursday, as per the daily Fibonacci charts, the BSE Sensex is likely to face resistance around 32,040-32,170-32,310, and in case of a correction, the BSE index may seek support around 31,170-31,040-30,900.
The NSE Nifty after nine trading sessions has managed to conquer its 20-DMA (Daily Moving Average) today. The NSE index ended with a solid gain of 3.2 per cent at 9,315, while its 20-DMA is placed at 9,220.
The next couple of trading sessions would be crucial in terms of re-affirming the fact that today’s move was not mere a flash in the pan. The NSE index needs to sustain above the 20-DMA for the next two trading sessions, for the up move to gain strength. Failure to sustain above the 20-DMA, could term today’s move as a ‘Dead Cat Bounce’ and we may re-head towards the 9,000-mark.
On the positive front, if the Nifty is able to sustain consistently above the 20-DMA, the NSE index may then head towards 9,700-odd levels, which is the higher end of the Bollinger Band on the daily charts. While select momentum oscillators have turned favorable, the ADX index remains tepid – thus raising doubts about sustainability of the current up move.
Among the key momentum oscillators, the Slow Stochastic is in favour the bulls; the DI (Directional Index) has also given a positive crossover. However, the ADX index continues to underline the fact that neither the bulls nor the bears are strong enough currently. The MACD (Moving Average Convergence Divergence) and the 14-day RSI (Relative Strength Index) are inconclusive.
Disclaimer: The article is for information purpose only and does not advocate any buy or sell /recommendation.
