Market Outlook: Markets in overbought zone; 10,750 is pivot point for Nifty

Mumbai: The markets continued its upward momentum for yet another trading session on the back of all-round buying as news of India-China troop’s disengagement along the Line of Actual Control (LAC) boosted sentiment.

According to reports, after a marathon two hour talk between India’s National Security Advisor (NSA) Ajit Doval and Chinese Foreign minister Wang Yi, the Chinese army on Monday morning was seen removing tents and withdrawing its troops from the Galwan Valley as decided during the high-level talks.

The BSE benchmark index, the Sensex, opened with a positive gap of nearly 300 points, and continued to extend gains until early noon deals. The BSE index surged to a high of 36,662, and thereafter pared some gains towards the end of the trading session. The Sensex finally ended with a smart gain of 1.3 per cent (466 points) at 36,487.

Among the Sensex 30 stocks, Mahindra & Mahindra zoomed 7.5 per cent followed by Bajaj Finance up 6 per cent. Reliance, Maruti, TCS, HDFC Bank, Tata Steel, Tech Mahindra, Bajaj Finserv, SBI and IndusInd Bank gained 2-3 per cent each. On the flip side, Bajaj Auto and HDFC slipped around a per cent each.

Also Read: Weekly Outlook: Trend remains positive; Upside momentum may slow down as Nifty nears 10,900

The BSE Sensex, on Monday, crossed the weekly Fibonacci R1 and the monthly R2, thus indicating fresh upside target for the Sensex as per the weekly chart at 36,745 and 36,920, and as per the monthly chart at 36,990. The bias for the week is likely to remain positive as long as the BSE index holds above 36,300-level, below which 36,000-mark can act as a strong support.

As per the daily Fibonacci charts, on Tuesday, in case of an up move the BSE Sensex is likely to face resistance around 36,640-36,690-36,740, and in case of a down move, the BSE index is likely to seek support around 36,330-36,285-36,235.

With today’s 1.5 per cent gain at 10,764, the NSE Nifty has now come within striking distance of the 200-DMA (Daily Moving Average) which is around 10,890-odd level. The NSE index has multiple resistance around the 10,900-11,050 range, hence a pause or a pull-back from these levels cannot be ruled out. For the upward momentum to continue tomorrow, the Nifty needs to sustain above 10,750. Failure to sustain above 10,750, can trigger some profit-taking and the NSE index may slip towards 10,600-level.

Among the key momentum oscillators on the daily charts, the DI (Directional Index) along with the ADX (Average Directional Index) continues to indicate that bulls are strong currently. However, the Slow Stochastic is showing some signs of tiredness, while the MACD (Moving Average Convergence Divergence) remains inconclusive. The 14-day RSI (Relative Strength Index) has breached the overbought zone for the first time since November 2019.

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