Market Outlook: Range-bound trade likely to continue

Mumbai: The markets started the holiday-shortened week on a promising note on the back of positive global cues. However, weakness in select financial and technology shares saw the markets slip into the red towards the latter half of the day. This been the last week of the month coupled with monthly derivatives expiry the markets can be quite choppy.

The BSE benchmark index, the Sensex, opened with a near 200-point positive gap at 30,864 and soon rallied to a high of 31,087. The BSE index thereafter pared gains and slipped to a low of 30,512 – down 575 points from the day’s high. Heavyweights Bharti Airtel, TCS and Infosys were the major draggers today. The Sensex finally ended with a modest loss of 63 points at 30,609.

Today’s movement seems to be inconclusive in terms of indication on the weekly Fibonacci chart. However, since the bias on the monthly Fibonacci chart is negative, one can expect some more downward pressure. Has explained in the weekly outlook, the BSE index could swing in a wide range of 29,770 – 31,280 this week. Hence, expect range-bound trading to continue amid some choppiness.

As per the daily Fibonacci charts, on Wednesday, the BSE Sensex is likely to seek support around 30,390-30,320-30,255. In case of an up move, the BSE index may face resistance around 30,830-30,895-30,965. Beyond these levels there is a possibility of the index extending the directional move towards the broader range mentioned for the week.

The NSE Nifty, as expected, is facing some resistance around the 20-DMA (Daily Moving Average), which is currently around 9,215 odd level. The NSE index today touched a high of 9,162, but eventually settled 10 points in red at 9,029.

Going forward, the NSE index may once again test the recent lows around the 8,800-level, which is also the lower end of the Bollinger Band on the daily charts. While the bias remains slightly negative, any kind of sell-off may soon see a pull-back as the ADX (Average Directional Index) remains tepid on the daily charts. The ADX indicates that neither the bulls nor the bears are strong enough currently. The broader range for the Nifty could be 9,220 – 8,800 for this week.

Most of the key momentum oscillators are giving inconclusive signals – the MACD (Moving Average Convergence Divergence) and the DI (Directional Index) are inconclusive. The 14-day RSI (Relative Strength Index) is in neutral mod, while the Slow Stochastic is marginally positive. Overall, it seems like the NSE index needs to break and close above the 20-DMA convincingly for fresh up move to start.

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