Market Outlook: Nifty testing crucial support at 200-DMA; resistance likely at 11,000-mark

@rex_cano

Mumbai: It was a day where the things turned from bad to worse for the markets. Unabated selling pressure across the board saw the BSE index drift lower as the day progressed. However, with the September derivatives series over today, hopefully there could be some sanity in the markets tomorrow.

Mirroring the weak US cues, the BSE benchmark index, the Sensex, opened with a significant negative gap of 380 points at 37,282. The BSE index touched a low of 36,496 towards the fag end of the trading day. The Sensex finally ended with a huge loss of 1,115 points at 36,554. So far this week, the BSE index has shed a massive 2,300 points.

Among the Sensex 30 stocks, IndusInd Bank, Bajaj Finance, TCS and Mahindra & Mahindra slumped 6-7 per cent each. Tech Mahindra, Tata Steel, ICICI Bank, Infosys, Axis Bank, Bajaj Finserv, SBI, Bharti Airtel, ITC, Sun Pharma, HCL Technologies, Maruti Suzuki and NTPC plunged 3-5 per cent each. Hindustan Unilever was the sole gainer, up 0.4 per cent.

The BSE Sensex has now broken all its support on the monthly Fibonacci chart, the next significant support for the index is now at 34,900-level. However, given the ferocity of the current fall, a pull-back to 37,450-odd level cannot be ruled out in case global cues are supportive.

Also Read: Market Outlook: Bias remains negative; Nifty seeks support at 11,065

As per the daily Fibonacci chart, on Friday, in case of an up move the BSE Sensex is likely to face resistance around 36,860-36,960-37,050. On the other hand, in case of a decline the Sensex may seek support around 36,250-36,150-36,050.

The NSE Nifty today registered its biggest single day percentage fall since May 18, 2020. The NSE index as anticipated in our daily outlook yesterday came within striking distance of its 200-DMA (Daily Moving Average) at 10,760, as the index touched a low of 10,790. The Nifty today ended with a heavy loss of almost 3 per cent at 10,806. The index has shed 1,000 points from its recent peak at 11,794 in mere 19 trading sessions.

The NSE index continues to trade consistently below its lower-end of the Bollinger Band on the daily chart, which is a worrying sign. The lower-end of the Bollinger Band is now at the 11,000-mark, the NSE index needs to climb and sustain above it to reverse the current bear run. The Nifty has near support at its 200-DMA, below which the next major support is at the 100-DMA at 10,620-odd level.

Among the key momentum oscillators on the daily chart, the DI (Directional Index) and the MACD (Moving Average Convergence Divergence) continue to indicate a bearish bias. The Slow Stochastic is also negative, but is now reaching an oversold zone. The 14-day RSI (Relative Strength Index) is also entering an oversold zone. Hence, a small relief rally can be expected in the coming trading sessions.

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