Market Outlook: Markets in consolidation mode; bias to remain bullish for Sensex above 40,500

@rex_cano

Mumbai: The markets consolidated in a relatively narrow range today as traders awaited fresh cues for the next directional move. Later tonight, the Supreme Court is expected to announce its verdict on the loan moratorium case and tomorrow IT major Infosys will be announcing its Q2 results. These two major developments coupled with the overseas cues will dictate the market trend on Wednesday.

The BSE benchmark index, the Sensex, opened almost unchanged at 40,593 and then moved to a high of 40,787. Profit-taking at higher levels saw the BSE index once again slip into red to a low of 40,462. The Sensex finally ended the day marginally (32 points) in green at 40,626.

Among the Sensex 30 stocks, HCL Technologies rallied 4 per cent. Kotak Mahindra Bank, Infosys, Reliance Industries, UltraTech Cement and Tech Mahindra gained 1-2 per cent each. On the other hand, Titan Industries, Sun Pharma, ICICI Bank, Bajaj Finance, SBI, Maruti Suzuki, Axis Bank, Nestle India, HDFC Bank, HDFC, ITC, Larsen & Toubro, Tata Steel, Mahindra & Mahindra and IndusInd Bank were down 1-2 per cent each.

As per the weekly Fibonacci chart, the bias for the week is likely to remain positive as long as the BSE index sustains above 40,500-level, on the upside the BSE index may rally towards 41,180-41,390-41,600. On the flip side, in case of failure to sustain above 40,500, the Sensex can slide towards 40,100-39,840.

Also Read: Market Outlook: Sensex, Nifty likely to see more upside during the week

As per the daily Fibonacci chart, on Wednesday, in case of an up move the BSE Sensex may face resistance around 40,750-40,790-40,830. On the other hand, in case of a decline the Sensex is likely to seek support around 40,500-40,460-40,420.

The NSE Nifty traded sideways within its previous trading session range. The index touched a high of 11,988 and a low of 11,889, before settling a tad higher at 11,934. The NSE index seems to be taking a breather following the recent sharp rally of nearly 1,200 points.

Going ahead, the 11,800-level is likely to be the major near term support for the Nifty. In case, the NSE index fails to hold the 11,800 support, then we may see a slide towards 11,600-odd level. On the upside, the NSE index is likely to test 12,150 in the coming trading sessions.

Among the key momentum oscillators on the daily chart the DI (Directional Index) and MACD (Moving Average Convergence Divergence) continue to remain in favour of the bulls. The Slow Stochastic and the 14-day RSI (Relative Strength Index) are in overbought territory.

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