Market Outlook: Benign global cues may see our mood may turn cautiously optimistic

@rex_cano

Mumbai: Mirroring weak cues from the US markets, the BSE benchmark index opened with a negative gap of 380-odd points at 37,989. The BSE index soon attempted a pull-back but could only manage to touch a high of 38,253 – still 110 points shy of its previous close. Thereafter, the BSE index grinded in the negative zone on the back of selling pressure in select financial shares. The Sensex eventually ended with a loss of 171 points at 38,194.

Among the Sensex 30 stocks, Tata Steel rose over 3 per cent and Reliance Industries gained 2.5 per cent. Sun Pharma, Bharti Airtel, Nestle India and Asian Paints were up over a per cent each. On the other hand, SBI tumbled 4.5 per cent, Bajaj Finserv, Axis Bank, ONGC, ITC, Bajaj Finance, ICICI Bank, Kotak Mahindra Bank, HDFC Bank, Infosys, TCS and HDFC declined 1-3 per cent each.

Also Read: Market Outlook: 20-DMA remains near-term key hurdle for the Nifty

After giving a minor buy signal on the weekly Fibonacci chart on Tuesday, the BSE Sensex today has given a minor sell signal on the same. More importantly, the BSE index now has also given a minor sell signal on the monthly Fibonacci chart. Hence, the markets may see limited up move from current levels in case of a pull-back rally. 

For the remainder of the week, today’s low can be a pivot point for the bulls. In case, the BSE index is able to sustain above 37,935-37,950 level for the remainder of the week, a pull-back rally towards 38,600-38,750 odd levels seems likely. As per the monthly Fibonacci chart the up move may extend up to 39,300-odd level, which is likely to be a major hurdle for this month.

As per the daily Fibonacci charts, on Thursday, in case of a decline the BSE Sensex is likely to seek support around 37,690-37,480-37,270, and in case of an up move the BSE index may face resistance around 38,310-38,350-38,390.

The NSE Nifty tested its support zone in trades on Wednesday around the lower-end of the Bollinger Band and then pulled back a wee bit. The NSE index touched a low of 11,185 as against its 50-DMA (Daily Moving Average) at 11,155 and the lower-end of the Bollinger Band at 11,170. The Nifty eventually ended the day at 11,278, down 0.4 per cent.

Going ahead, the above mentioned support zone, i.e. the range between 11,155-11,170 needs to be closely watched, as if the NSE index is able to take support around these levels, we may witness a pull-back towards its 20-DMA at 11,400-odd level. With select momentum oscillators hitting oversold levels and global cues turning positive or remaining neutral, the mood may turn cautiously optimistic for our markets.

Among the key momentum oscillators on the daily charts, the Slow Stochastic remains have reached oversold territory. However, the MACD (Moving Average Convergence Divergence) and the DI (Directional Index) still continue to favour the bears. The 14-day RSI (Relative Strength Index) remains in the neutral zone.

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