Market Outlook: Market seems to be in buy on dip mode

Mumbai: The markets started the day on a bullish note on the back of positive global cues and hopes of pick-up in economic activity as India reopened businesses. The BSE benchmark index, the Sensex, surged to a high of 34,928 once again largely led by financials. Reliance Industries touched a fresh life-time high today in intra-day deals, the stock has seen a significant run-up on attracting large multiple deals for its Jio platform.

However, profit-taking emerged in select counters, including Reliance, in the second half of the trading session, as a result of which the BSE index pared gains and briefly slipped into the negative zone to touch a low of 34,212 – down 716 points from the day’s high. The Sensex eventually ended with a modest gain of 83 points at 34,371.

Among the Sensex 30 stocks, IndusInd Bank and Axis Bank soared over 6 per cent each. Bajaj Finance, ONGC, Titan, Infosys, Tech Mahindra and Hero MotorCorp gained 2-5 per cent each. On the flip side, Mahindra & Mahindra slipped nearly 3 per cent. UltraTech Cement, HDFC Bank, Tata Steel, Nestle, ITC and Sun Pharma declined 1-2 per cent each.

Also Read: Weekly Outlook: Bullish start for June, more gains likely ahead

The BSE Sensex has given a buy signal on the weekly Fibonacci chart, at the same time breached the support by dipping below weekly close. This probably indicates that we may see the BSE index weaken briefly during the course of the week, with a strong possibility of recovery thereafter. It is very much likely that the Sensex may record a new weekly high or re-test today’s high again during the week. Hence, the bias for the week seems to be ‘buy on dips’. One can expect significant support for the BSE index around 33,670 and 33,290.

As per the daily Fibonacci charts, on Tuesday, in case of an up move the BSE Sensex may face resistance around 34,640-34,730-34,810, and in case of a down move, the BSE index is likely to seek support around 34,100-34,010-33,930.

The NSE Nifty retraced after testing its 100-DMA (Daily Moving Average) around 10,300-odd level early in trade. The overall trend continues to look up, with the next logical target being the 200-DMA around 10,950-odd level. However, it is quite possible that the NSE index consolidates before making a dash towards 200-DMA. The overall trend is likely to remain positive as long as the Nifty sustains above 9,725-level.

Among the key momentum oscillators, the 14-day RSI (Relative Strength Index) and the Slow Stochastic are showing some signs of consolidation. The MACD (Moving Average Convergence Divergence) and the DI (Directional Index) continue to remain in favour of the bulls.

Disclaimer: The article is for information purpose only and does not advocate any buy or sell /recommendation.