Market Outlook: Nifty may weaken on sustained trade below its 20-DMA

@rex_cano

Mumbai: Mirroring negative cues from the US markets, the key benchmark indices opened on a negative note and languished in red throughout the day. Overnight, the US markets reversed direction from the highs and more importantly the futures too extended losses after the US Federal Reserve hinted the possibility of the zero interest rate scenarios to continue until 2023.

The BSE benchmark index, the Sensex opened 180-odd points lower at 39,121. The BSE index, thereafter, attempted a pullback but could only manage to touch a high of 39,235. Fresh selling pressure towards the end saw the index drop to a low of 38,926. The Sensex finally ended with a loss of 323 points at 38,980.

Among the Sensex 30 stocks, Bajaj Finserv, PowerGrid Corporation, Larsen & Toubro, TCS, ICICI Bank, Kotak Mahindra Bank, Tata Steel, Bajaj Finance, SBI, HDFC, Sun Pharma, NTPC, ITC, Reliance Industries and HDFC Bank declined 1-2 per cent each. On the positive front, HCL Technologies and Infosys gained 2.3 per cent and 1 per cent, respectively.

Also Read: Market Outlook: Sensex breaks above 39,300, expect volatility to increase going ahead

While the Sensex has given a mixed signal on the monthly Fibonacci chart, the BSE index seems to have a slightly negative bias on the weekly Fibonacci chart. This week the BSE index after giving a minor sell signal faced resistance near its weekly R2 at 39,370. Hence, it is likely that we may see further downward pressure on Friday. The BSE index may possibly drift towards 38,600-level.

As per the daily Fibonacci charts, on Friday, in case of an up move the BSE Sensex may face resistance around 39,100-39,135-39,170. On the other hand, in case of a decline the Sensex may seek support around 38,860-38,825-38,790.

Despite weakness in the markets, the NSE Nifty managed to hold firmly above its 20-DMA (Daily Moving Average). The NSE index registered a low at 11,499 and ended 0.8 per cent lower at 11,516. Going ahead, the 20-DMA continues to remain the key pivot point. With the upside likely to be capped around 11,650, sustained trade below the 20-DMA can trigger a slide towards 11,250-odd level, which is the 50-DMA and the lower-end of the Bollinger Band on the daily chart.

Among the key momentum oscillators on the daily charts, the DI (Directional Index) and the Slow Stochastic continue to indicate a positive bias. The MACD (Moving Average Convergence Divergence) remains inconclusive while the 14-day RSI (Relative Strength Index) is constantly 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.