Market Outlook: Caution advised at higher levels; Nifty needs to sustain above 11,200 for further gains

@rex_cano

Mumbai: The markets gyrated between the zones on Wednesday after the benchmark indices failed to hold on the opening gains. Profit-taking was seen in select financial and technology shares, while Reliance Industries moved to a fresh life-time high. The markets have been driven by liquidity and hopes of an early vaccine find for the coronavirus pandemic.

The BSE benchmark index, the Sensex, opened with a positive gap of nearly 250 points at 38,178, and soon spurted to a high of 38,199 before paring gains and nose-diving into the negative zone. The BSE index thereafter swung in and out of the positive zone for a major part of the trading session. The Sensex touched a low of 37,602 – down almost 600 points from the days high. A sharp recovery towards the end of the day saw the Sensex recoup most of its losses and finish with a minor loss of 59 points at 37,872.

Among the Sensex 30 stocks, Axis Bank zoomed over 7 per cent on the back of better-than-expected Q1 performance. Titan, PowerGrid Corporation, NTPC, ITC and Reliance Industries were the other major gainers. On the other hand, Hindustan Unilever shed 3 per cent. Tata Steel, Maruti, IndusInd Bank, Infosys, Larsen & Toubro, TCS, Asian Paints, Nestle, Kotak Bank, Bajaj Finance, SBI and HDFC Bank were the other prominent losers.

The weekly bias for the BSE Sensex is likely to remain positive as long as the index holds above 37,500-level. At the same time, the upside for the remainder of the week may be capped around 38,200-level based on today’s trade pattern. The BSE index was not only unable to sustain above the day’s open but also closed fairly below it. Hence, one needs to be cautious at the higher level.

Also Read: Market Outlook: Bias to remain bullish for Nifty above 11,150

As per the daily Fibonacci charts, on Thursday, in case of an up move the BSE Sensex is likely to face resistance around 38,100-38,170-38,240, and in case of a down move, the BSE index may seek support around 37,650-37,570-37,500.

The NSE Nifty retraced sharply from the higher-end of the Bollinger Band on the daily charts in intra-day deals. The NSE index, however, ended with a modest loss of 0.3 per cent at 11,133, having recovered from a low of 11,057. The Nifty now needs to sustain above 11,200-level for further gains to emerge, failure to do so can trigger some correction or consolidation. On the downside, the 200-DMA (Daily Moving Average) at 10,870 and 20-DMA at 10,700-odd level are likely to provide strong support.

Among the key momentum oscillators on the daily charts, the Slow Stochastic has turned mildly negative, while the MACD (Moving Average Convergence Divergence) remains inconclusive. The DI (Directional Index), however, continues to remain positive and the 14-day RSI (Relative Strength Index) is now in the overbought zone.

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