Market Outlook: Nifty reclaims 10K, charts indicate a likely pause

Mumbai: The markets continued their north-bound journey for the sixth straight trading session largely led by financial stocks. However, unlike yesterday the markets on Wednesday witnessed some profit-taking at higher levels owing to which the benchmark indices pared a decent amount of gains. The BSE benchmark index, the Sensex, touched an intra-day high of 34,489, but pared gains towards the close and settled at 34,110 – up 284 points from the previous close. 

Among the Sensex 30 stocks, Mahindra & Mahindra was the top gainer, up nearly 5 per cent. Kotak Mahindra Bank, Bajaj Finance, SBI, Nestle, ICICI Bank, ONGC and HDFC Bank were the other prominent gainers, up 2-3 per cent each. On the flip side, NTPC was the top loser with a decline of over 2 per cent. Bharti Airtel, Maruti, Hero MotoCorp and Infosys were the other notable losers.

With today’s high at 34,489, the BSE index has now also given a buy signal on the monthly Fibonacci charts. As per the monthly charts, the bias for the remainder of the month is likely to remain bullish with strong support expected around 33,050-32,850 range. In other words, in case, there is a correction in the market the BSE index is likely to find strong support in the above mentioned range. On the upside, the BSE index may now target 35,440 and 37,200-odd levels in the near term.

Also Read: Market Outlook: Bias likely to remain bullish as long as Sensex holds 32,850

As per the daily Fibonacci charts, on Thursday, in case of an up move the BSE Sensex is likely face resistance around 34,280-34,340-34,400, and in case of a down move, the BSE index may seek support around 33,930-33,880-33,820.

The NSE Nifty has ended above the higher end of the Bollinger Band for the third straight trading session and was up 0.8 per cent at 10,062. However, today the NSE index has given its first warning signal of possible trend reversal, as on the daily charts we have seen formation of ‘Doji’ pattern. Quite often formation of this particular pattern, wherein the day’s close is slightly below day’s open, indicates exhaustion of the existing trend.

A ‘Doji’ pattern at the top also indicates indecisiveness among the bulls at higher levels, and is often followed by some amount of consolidation or profit-taking. Today’s close is crucial for the NSE index going into the next trading session. In case, the index is not able to sustain above 10,060-odd level, we may witness some amount of profit-taking. In case of profit-taking, the Nifty may test 9,825-9,700 odd levels on the downside.

Among the other key momentum oscillators, the Slow Stochastic has given a negative divergence and the 14-day RSI (Relative Strength Index) which is nearing overbought zone is also showing some signs of tiredness. The MACD (Moving Average Convergence Divergence) and the DI (Directional Index), however, continue to remain in favour the bulls.

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