Market Outlook: Global cues to set the trend, US Fed chair Powell’s speech holds the key

@rex_cano

Mumbai: Follow-up buying in financial shares led the markets to fresh six-month high in trades today. The BSE benchmark index, the Sensex, opened with a positive gap of 220 points at 39,294. The BSE index soon touched a high of 39,327, and exhibited range-bound movement for a major part of the trading day. Some profit-taking towards the end of the trading session on account of the monthly derivatives expiry saw the BSE index slip briefly into red to a low of 39,047. However, the Sensex finally ended marginally (40 points) higher at 39,113.

Among the Sensex 30 stocks, IndusInd Bank for the second straight trading session zoomed over 6 per cent. Mahindra & Mahindra, SBI, HDFC, Axis Bank, Sun Pharma and Maruti Suzuki rallied 1-4 per cent each. On the other hand, ONGC, Bajaj Auto, Reliance Industries and Kotak Mahindra Bank declined over a per cent each.

Going ahead, the markets are likely to take cues from the US markets, which will react to the US Federal chief Jerome Powell’s speech later tonight. Investors are keenly awaiting cues for a fresh round of stimulus, inflation projection and a roadmap to a possible new monetary policy. A major directional move seems possible post Powell’s speech.

Also Read: Market Outlook: Sensex shows promise; Nifty needs to sustain above 11,580, can weaken below 11,500

With just two trading sessions remaining this month, one needs to wait to watch if the BSE Sensex goes on to test its next monthly Fibonacci upside targets at 39,450 and 39,900, respectively. As per the monthly Fibonacci chart, the BSE index can correct towards 38,400-level in case of weakness. 

As per the daily Fibonacci charts, on Friday, in case of an up move the BSE Sensex is likely to face resistance around 39,220-39,250-39,290, and in case of a down move, the Sensex may seek support around 39,000-38,970-38,940.

The NSE Nifty tested a high of 11,617 before settling at 11,559, up mere 0.1 per cent. The Nifty once again failed to conquer the higher-end of the Bollinger Band. Today was the fourth straight trading session wherein the NSE index tested the higher-end of the Bollinger Band. It seems that either the markets need a fresh trigger for an upside breakout or we may witness some correction from current levels. In a way, the US event can be that trigger.

On the positive side, the benchmark indices seem to be nudging higher, while stocks are seeing bigger moves. However, in case, the indices reverse traders may get caught on the wrong foot. Hence, one needs to be cautious at higher levels and trade with strict stop losses, which in this case can be the 20-DMA (Daily Moving Average) in case of the Nifty which is around 11,300. 

Among the key momentum oscillators on the daily charts, the DI (Directional Index) continues to remain in favour of the bulls. The MACD (Moving Average Convergence Divergence) has also turned marginally positive. However, the Slow Stochastic has given a negative divergence and the 14-day RSI (Relative Strength Index) is nearing the overbought zone.

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