Market Outlook: Bias likely to remain bullish as long as Sensex holds 32,850

Mumbai: The bulls continued to dominate the proceedings on Dalal Street for the fourth straight trading sessions on hopes of pick-up in economic activity as unlocking procedure unfolds. As India entered phase 5.0 of lockdown, the Centre has issued advisory allowing more business to function in a gradual manner across the country, barring activities in containment zones of the pandemic Covid-19.

The BSE benchmark index, the Sensex, opened almost 500 points higher at 32,906, and just did not bother to look back. Buying was seen across sectors, with financials, auto and metals leading the rally. The BSE index scaled a high of 33,674 in intra-day deals; however, some profit-taking towards the close saw the index pare some gains. The Sensex finally settled at 33,304 – up 879 points.

Among the Sensex 30 stocks, Bajaj Finance was the top gainer, the stock zoomed nearly 11 per cent in trades today. Titan, Tata Steel, SBI, Mahindra & Mahindra also ended with solid gains in the range of 6-8 per cent. HDFC, IndusInd Bank, Reliance Industries, HDFC Bank and TCS were the other major gainers. On the other hand, Sun Pharma, UltraTech Cement, Nestle and Hero MotoCorp slipped around 2 per cent each.

The Sensex has started the week and the month on a very optimistic note, in fact, the BSE index has given a strong buy signal on the weekly Fibonacci charts. As per the weekly charts, the bias for this week is likely to remain bullish as long as the BSE index sustains above 32,850. Having crossed the monthly R1 (resistance) at 33,525, the BSE index may now target the monthly R2 and R3 at 33,860 and 34,200, respectively.

Also read: Weekly Outlook: Nifty needs to sustain above 9,500

As per the daily Fibonacci charts, on Tuesday, in case of an up move the BSE Sensex may face resistance around 33,610-33,700-33,800, and in case of a down move, the BSE index may seek support around 33,000-32,905-32,810. A word of caution, the current up move may weaken in case the Sensex remains consistently below 32,850-level.

With today’s 2.5 per cent gain, the NSE Nifty has surged as much as 9 per cent in the last four trading sessions. Today, the Nifty has also given a fresh breakout on the daily charts, by closing above the higher end of the Bollinger Band. The breakout indicates that the near-term bias is likely to remain fairly bullish as long as the NSE index sustains above 9,675-odd level. The next logical target for the Nifty could be 10,100 as per the weekly charts and 10,400 as per the daily charts.

Among the other key momentum oscillators, the Slow Stochastic and the DI (Directional Index) continue to remain in favour the bulls. In fact, the ADX (Average Directional Index) is also now showing some signs of firming up. The MACD (Moving Average Convergence Divergence) too has given a positive crossover, while the 14-day RSI (Relative Strength Index) is nearing overbought levels. It would be fair to say, that the momentum is clearly in favour of the bulls and more gains may be possible as long as the benchmark indices hold above the key levels mentioned above.

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