@rex_cano
Mumbai: The markets tanked sharply in the second half of the trading session, taking cues from the overseas futures market. The European and the US benchmark indices were trading with deep cuts of 2-3 per cent during the noon trades, as a result of which our markets spiraled southwards towards the close.
Heavy selling was witnessed in financial shares amid reports that Britain’s biggest bank HSBC moved Ponzi scheme millions despite warning. As per the reports, secret leaked files revealed that HLBC allowed fraudsters to transfer millions of dollars around the world even after it learned about the scam in 2013 and 2014.
The BSE benchmark index, the Sensex had started the day on a tentative note at 38,813. The BSE index swung between zones in the early morning deals and managed to touch a high of 38,991. The markets began to weaken post noon deals and the selling accentuated in late noon deals. The Sensex toppled to a low of 37,939, and ended with a heavy loss of 812 points at 38,034.
Also Read: Weekly Outlook: The 38,630-level will be the pivot point for the Sensex
Among the Sensex 30 stocks, IndusInd Bank slumped almost 9 per cent. Bharti Airtel and Tata Steel plunged nearly 6 per cent each. ICICI Bank, Mahindra & Mahindra, Maruti Suzuki, Axis Bank, Bajaj Finance, Nestle India, ONGC, Sun Pharma, Titan Industries, SBI, Bajaj Finserv, UltraTech Cement, Hindustan Unilever and Asian Paints dropped 3-5 per cent each. On the positive front, Kotak Mahindra Bank was up nearly a per cent. Infosys and TCS were the only other gainers.
The Sensex, as anticipated in our weekly outlook tanked sharply after breaking below 38,630-level and re-tested its monthly low around 37,950-level. With today’s sharp fall, the BSE index in a way may have completed its sell signal on the monthly Fibonacci chart. However, one needs to wait for a confirmation, which could be in the form of – today’s low should not be violated or the BSE index takes support at one of the following levels – 37,450-37,080-36,710.
It may also be recalled that the BSE index had given a mixed signal on the monthly Fibonacci charts, which means that if the sell side has been completed then the BSE index may attempt to complete the buy side signal. For the buy side signal to be completed the BSE index needs to cross and sustain above the 38,630-level. As per the monthly buy signal, if the BSE index is able to sustain above 38,630, it can potentially re-test its monthly high or soar higher towards the 40,000-mark.
As per the weekly Fibonacci chart, the BSE index has given a strong sell signal, by breaking below the weekly S3. The bias for the remainder of the week is likely to remain bearish as long as the BSE index remains below 38,360, above which the BSE index can spurt to 38,670-odd level.
As per the daily Fibonacci charts, on Tuesday, in case of an up move the BSE Sensex is likely to face resistance around 38,440-38,560-38,685. On the other hand, in case of a decline the Sensex may seek support around 37,630-37,510-37,385.
The NSE Nifty tanked sharply after slipping below its 20-DMA (Daily Moving Average), and also dived below its 50-DMA and lower-end of the Bollinger Band in intra-day deals to hit a low of 11,219. The Nifty eventually ended with a huge loss of 2.2 per cent at 11,251, precisely at its lower-end of the Bollinger Band and tad below its 50-DMA, which is at 11,275.
Key momentum oscillators on the daily chart have given a negative divergence, thus indicating the possibility of more downside to the markets in the near term. Sustained trade below 11,250, can trigger a slide towards the 200-DMA at 10,775. In case of an up move, the 20-DMA at 11,460 is likely to act as a hurdle now.
Among the key momentum oscillators on the daily chart, the DI (Directional Index) and the Slow Stochastic have given a fresh negative divergence. The MACD (Moving Average Convergence Divergence) is also marginally negative while 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.
