Market Outlook: Nifty continues to hold above 20-DMA

@rex_cano

Mumbai: The markets have started the week on a slightly optimistic note, by staging a smart recovery from the early morning lows. The neighbouring Asian markets were also largely positive after China’s stimulus measure, wherein its Central Bank injected around $100 billion of liquidity in its money market through a 12-month lending facility.

Back home, the BSE benchmark index, the Sensex, opened with a huge positive gap of 290-odd points and registered a high at 38,119, before immediately slipping into the negative zone. The BSE index dropped to a low of 37,734 (down almost 380 points from the day’s high), but soon snapped back into the positive zone. Barring the early morning volatility the benchmark index remained stable for the remainder of the day. The Sensex finally ended with a gain of 173 points at 38,051.

Also Read: Weekly Outlook: Markets in consolidation mode; key supports may be tested

Among the Sensex 30 stocks, NTPC soared 8 per cent. Bajaj Auto and Tech Mahindra rallied around 4 per cent each. ONGC, Maruti Suzuki, Titan, Asian Paints, Larsen & Toubro, PowerGrid Corporation, Bajaj Finance, Kotak Mahindra Bank, Tata Steel, HCL Technologies and Mahindra & Mahindra were the other prominent gainers. On the flip side, SBI slipped nearly 2 per cent. Bharti Airtel and Reliance Industries were the other notable losers.

The BSE index, which had given a buy signal on the monthly Fibonacci chart last week, seems to be taking support around its monthly close. The near term bias is likely to remain positive as long as the Sensex sustains above 37,600-level. Failure to sustain above 37,600-level can be a cause of concern. On the upside, the BSE index may soon resume its journey towards the 39,000-mark.

As per the daily Fibonacci charts, on Tuesday, in case of an up move the BSE Sensex may face resistance around 38,200-38,240-38,290, and in case of a down move, the BSE Sensex is likely to seek support around 37,900-37,860-37,810.

The NSE Nifty for the second straight trading session, managed to close above its 20-DMA (Daily Moving Average) after dipping below it in intra-day deals. The NSE index touched a low of 11,145 as against the 20-DMA at 11,185-odd levels. The Nifty finally ended 0.6 per cent higher at 11,247.

The NSE Nifty has been trapped between the 20-DMA and the higher-end of the Bollinger Band for the last 10 trading sessions. The range has also been getting narrower over time. Now the range is 11,185-11,385. A breakout in either direction can trigger a sharp move in that particular direction.

In case of an upside breakout, the NSE index may spurt towards 11,500-mark. On the other hand, a breakout on the down side can trigger a slide towards the lower-end of the Bollinger Band, around the 11,000-mark.

Among the key momentum oscillators on the daily charts, the DI (Directional Index) is now marginally positive. The Slow Stochastic, however, is in favour of the bears. The MACD (Moving Average Convergence Divergence) remains inconclusive, while the 14-day RSI (Relative Strength Index) is in the neutral mode.

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