Market Outlook: Bias for Nifty to remain bearish below 11,200; Sensex may seek support at 37,450

@rex_cano

Mumbai: The markets extended losses in trades today on account of persistent selling pressure in select banking shares and index heavyweight Reliance Industries. While global cues were neutral, derivatives expiry and daily margin related pressure weighed on the markets.

The BSE benchmark index, the Sensex, which opened 170-odd points higher at 38,201, soon slipped into the negative zone after touching a high of 38,210. Intense selling pressure in the first hour of trades saw the BSE index plunge to a low of 37,531 – down over 500 points. The Sensex thereafter recouped losses and at one point rebounded into the positive zone, but only to slip back into red. The bears seemed to have the last laugh, as the Sensex eventually ended with a loss of 300 points at 37,734.

Among the Sensex 30 stocks, Maruti Suzuki, Larsen & Toubro and IndusInd Bank shed nearly 3 per cent each. Axis Bank, ONGC, HDFC, Reliance Industries, Asian Paints, Kotak Mahindra Bank, Nestle, India, Titan Industries, HDFC Bank, Mahindra & Mahindra and PowerGrid Corporation declined 1-2 per cent each. On the positive front, HCL Technologies and TCS gained 2.5 per cent each. Tech Mahindra, Sun Pharma and ICICI Bank were also up over a per cent each.

Also Read: Market Outlook: More downside likely; Nifty needs to sustain above 11,250 to negate weakness

With today’s low at 37,531, the BSE index came within striking distance of its monthly S1 at 37,450-level. Going forward, in case the BSE index is able to hold above 37,450, we may witness an attempt to pull back towards 38,630-level. The 38,630-level remains the key pivot point for the week, above which the bias may turn favourable for the bulls.

As per the weekly Fibonacci chart, the bias for the week is likely to remain bearish as long as the BSE index remains below 38,360, above which the next major hurdle would be 38,670. As per the daily Fibonacci charts, on Wednesday, in case of an up move the BSE Sensex may face resistance around 37,990-38,070-38,150. On the other hand, in case of a decline the Sensex is likely to seek support around 37,470-37,390-37,310.

The NSE Nifty tumbled to a low of 11,085, in intra-day deals and finally settled with a loss of 0.9 per cent at 11,154. Today, the NSE index ended below its lower-end of the Bollinger Band for the first time since March 23. The near term bias for the Nifty is likely to remain bearish as long as the NSE index remains below 11,200 – which is the lower-end of the Bollinger Band.

Persistent trade below the lower-end of the Bollinger Band can push the NSE index towards its 200-DMA (Daily Moving Average) at 10,770-odd level. However, the Nifty has near support at 11,065, which is the 100-WMA (Weekly Moving Average) and 11,135 its 20-MMA (Monthly Moving Average). Having a couple of strong supports nearby can help reverse the course. But for that to happen, the NSE index needs to sustain above 11,200.

Among the key momentum oscillators on the daily chart, the DI (Directional Index) and the Slow Stochastic are clearly in favour of the bears. The MACD (Moving Average Convergence Divergence) too is marginally negative. However, the 14-day RSI (Relative Strength Index) is now nearing the oversold zone.

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