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Weekly Outlook: Nifty needs to sustain above 11,093 for the up move to continue

Rex Cano
By Rex Cano

@rex_cano

Mumbai: The markets exhibited higher volatility in the week under review owing to monthly derivatives expiry related pressure. Off late, the markets have reacted favourably to positive news – global cues, Q1 earnings and fund flows, whereas at the same time they have been snubbing the negative news – rising cases of coronavirus, escalating tension between US and China and lower economic growth. Going forward, once the liquidity dries up, the markets may once again enter a corrective phase owing to negative news flow.

This week, the BSE benchmark index, the Sensex rallied to a fresh 5-month high at 38,617 – up nearly 500 points from the previous week. However, the BSE index thereafter reversed course and tumbled to a low of 37,432 – down 1,185 points from the week’s high. The Sensex finally ended with a loss of 1.4 per cent (522 points) at 37,607. The BSE index, however, ended July with a solid 7 per cent gain.

Among the Sensex 30 stocks, Sun Pharma was the major gainer this week, the stock surged over 9 per cent. Tata Steel, TCS, Infosys, Maruti Suzuki and HCL Technologies were the other major gainers, up 4-6 per cent each. On the other hand, ICICI Bank slumped over 9 per cent and HDFC Bank too shed nearly 8 per cent. Reliance Industries, ONGC, HDFC, Axis Bank, ITC, NTPC and PowerGrid Corporation were the other significant losers, down 2-4 per cent each.

As per the weekly Fibonacci charts, next week, in case of an up move, the BSE Sensex may face resistance around 38,060-38,200-38,340, and in case of a down move the BSE index is likely to seek support around 37,155-37,015-36,875. 

The NSE Nifty ended its five week winning streak, with a loss of 1.1 per cent at 10,073. More notably, the NSE index ended the month of July with a strong gain of 7.5 per cent, but failed to close above its 20-MMA (Monthly Moving Average) placed at 11,093. Going into August, this level could be crucial in terms of deciding the bias for the month. 

The NSE index needs to sustain above 11,093-level on a consistent basis for the up move to continue. Failure to sustain above 11,093 level can trigger a fresh correction towards 10,500-odd level during the course of the month. 

As per the weekly charts, the NSE index has closed firmly above its 100-WMA (Weekly Moving Average) at 11,020 for the second straight week, which is a positive sign. The 11,020-11,093 range can be a very confusing zone for the traders, one needs to wait for a decisive move on either side before taking a directional call. As per the weekly charts, near support for the Nifty exists around the 50-WMA at 10,900-odd levels, below which a sharper fall seems possible. 

Among the key momentum oscillators on the weekly charts, the DI (Directional Index) and the MACD (Moving Average Convergence Divergence) continue to remain positive. The Slow Stochastic is inconclusive, while the 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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