Market Outlook: Upside seems capped, fresh strength for Nifty only above 9,235

Mumbai: The markets exhibited a high amount of volatility on account of the weekly expiry in the derivatives segment. The BSE benchmark index, the Sensex, after a near 100-point positive opening gap, rallied to a high of 31,189 amid choppy movement. The BSE index pared gains towards the close, and finally ended 114 points higher at 30,933.

In the process, the BSE index had briefly turned positive on a weekly basis, but could not sustain at higher levels. Going ahead, the BSE index not only needs to sustain above 31,100-odd level, but also needs to overcome the hurdle around 31,280 for hopes of a pull-back rally.

On the flip side, the 30,640-odd level needs to be watched closely on Friday, as failure to sustain above it could trigger a steeper slide in trades. As per the daily Fibonacci charts, the BSE Sensex may seek support around 30,770-30,720-30,670, while in case of an up move the BSE index may face resistance around 31,095-31,145-31,195.

With today’s 0.4 per cent gain at 9,106, the NSE Nifty has managed to close above its 50-DMA (Daily Moving Average) for the first time since February 13, 2020. However, the up move may be short-lived as the NSE index may soon run into a fresh resistance around 9,235-odd level, which is the 20-DMA. The Nifty needs to sustain above 9,235 for strength to emerge.

As explained yesterday, there seems to be a paradoxical behaviour between the Nifty daily and weekly charts, while the former seems to tilt in favour for the bulls, the latter seems firmly in control of the bears. Hence, one can assume that the NSE index may remain range-bound until we see a clear directional move on either of the charts. Although, for now, it seems that the bias is in favour of the bears.

The NSE index will need to sustain above the 20-DMA on a closing basis for opening the possibility of rally towards 9,700-odd levels. Till such time, one can assume that failure to sustain above 9,235-odd level can lead to a re-test of the lows around 8,800-odd level.

Among the key momentum oscillators – the Slow Stochastic has given a positive crossover and is in favour of the bulls. The MACD (Moving Average Convergence Divergence) and the 14-day RSI (Relative Strength Index) are in neutral mode. The DI (Directional Index) too is somewhat inconclusive, while the ADX (Average Directional Index) continues to remain tepid, indicating lack of strength for either the bulls or bears.

Disclaimer: The article is for information purpose only and does not advocate any buy or sell /recommendation.