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Market Outlook: Consolidation continues; Sensex needs to sustain above 35,170 for fresh upside momentum

Rex Cano
By Rex Cano

Mumbai: The markets traded with a positive bias for a larger part of the trading day today, before slipping into the negative territory in the final hour of the trading session. While global cues were mixed, the action in our markets was largely subdued, barring stock specific movements. 

The BSE benchmark index, the Sensex, opened with a positive gap of over 200 points at 35,168, and soon jumped to a high of 35,234. The index, thereafter, consolidated and traded in the positive region until the final hour. Profit-taking in select index heavyweights like ITC and Reliance saw the Sensex slip to a low of 34,813 – down 421 points from the day’s high. The Sensex finally ended with a minor loss of 46 points at 34,916.

Among the Sensex 30 stocks, Maruti and Nestle rallied nearly 3 per cent each. ICICI Bank, UltraTech Cement, Tata Steel and NTPC were up 1-2 per cent each. On the negative side, PowerGrid and Sun Pharma declined nearly 2 per cent each. Bharti Airtel, ITC, ONGC, Reliance, IndusInd Bank, Bajaj Auto, Bajaj Finance, HDFC Bank and TCS were the other prominent losers.

Also Read: Market Outlook: Markets in consolidation mode; Strong support for the Nifty around 10,120

The Sensex crossed its weekly close at 35,171, but was unable to sustain consistently above it. As per the weekly Fibonacci chart, the bias may remain negative as long as the BSE index sustains below 35,171. On the downside, the Sensex may test the weekly S2 or S3 at 34,565 and 34,425, respectively. In order for the up move to gain momentum, the BSE index needs trade and sustain consistently above 35,171-level.

As per the daily Fibonacci charts, on Wednesday, in case of an up move the BSE Sensex may face resistance around 35,075-35,125-35,175, and in case of a down move, the BSE index is likely to seek support around 34,755-34,705-34,655.

The NSE Nifty has been trading in a narrow band, between its 20-DMA (Daily Moving Average) and the higher end of the Bollinger Band on the daily charts for the last four trading sessions. The 20-DMA is indicating support around 10,150-odd level and the higher end of the Bollinger Band is indicating resistance around 10,500-level. The markets are experiencing indecisive behaviour in this narrow band. The Nifty needs to break-out of this band for charting a new course.

The broader trend continues to remain positive as the NSE index is trading firmly above the 20-DMA, 50-DMA and 100-DMA. As per the price-moving-averages action, the NSE index seems on course to test the 200-DMA around 10,900-odd level.

Among the key momentum oscillators on the daily charts, the Slow Stochastic and the MACD (Moving Average Convergence Divergence) have converged, hence fresh indication is awaited. The DI (Directional Index) continues to remain in favour of the bulls, while the 14-day RSI (Relative Strength Index) is in neutral mode.

Disclaimer: The views expressed in this article are personal and for information purpose only, it does not advocate any buy or sell /recommendation. 

Rex Cano
Rex Cano
Having worked as a journalist mostly in the financial domain for over 20 years, he has gained and applied knowledge of markets in his tenure with established and reputed organisations - IIFL, Sharekhan, Business Standard, HDFC Sec to name a few. He further explored his editorial skills and expertise while working with Free Press Journal and SBI Mutual Fund. He continues to draw inspiration from his passion for numbers with the aim to simplify the market know-how to those who love it.
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