Market Outlook: Sensex needs to sustain above 34,730 for the positive momentum to continue

Mumbai: The markets exhibited high amount of volatility in trades on Thursday on account of the monthly derivatives expiry. The important point to note was that the market was able to bounce back on every dip, indicating ample buying support. Friday will mark the beginning of the July series for the futures & options. After three positive series – April, May & June respectively, it would be interesting to note how July pans out.

The BSE benchmark index, the Sensex, opened with a significant negative gap at 34,525 – down almost 340-odd points from the previous close. The index soon touched a low of 34,500, and thereafter recouped all its losses. After hovering in the positive zone for some time, the BSE index once again slipped deep into red only to bounce back on a stronger note. The Sensex touched a high of 35,082 in mid-noon deals – an intra-day gain of 582 points. However, the Sensex eventually ended with a modest loss of 27 points at 34,842.

Among the Sensex 30 stocks, ITC soared 5.5 per cent and was the top index gainer. Kotak Bank, Bajaj Finance and Hindustan Unilever were the other significant gainers – up over 2 per cent each. On the flip side, Asian Paints shed 3.3 per cent and was the top index loser. Infosys, HCL Technologies, ONGC, Mahindra & Mahindra, TCS, IndusInd Bank, Larsen & Toubro, Tech Mahindra, Titan, HDFC and Tata Steel declined 1-2 per cent each.

Also Read: Market Outlook: Expect buying to emerge on dips; Sensex may re-test the weekly high

By slipping below its previous week’s close, the BSE Sensex has now given mixed signal on the weekly Fibonacci charts. The BSE index now needs to sustain above 34,730-level for the positive momentum to continue on Friday. As per the daily Fibonacci charts, on Friday, in case of an up move the BSE Sensex may face resistance around 35,065-35,135-35,200, and in case of a down move, the BSE index is likely to seek support around 34,620-34,550-34,480.

The NSE Nifty ended wee bit in red at 10,289, still fairly higher compared to its 100-DMA (Daily Moving Average) at 10,020-odd level. To complement the bullish scenario, the 20-DMA has now moved above the 100-DMA, and stands at 10,055. In short, the 10,055-10,020 zone is likely to act as a strong support zone for the Nifty in the near term. The 50-DMA is currently hovering around 9,550-odd level, which indicates the possible lower end of the trading range.

For now, the NSE Nifty needs to sustain above the 100-DMA for the upside momentum to continue. Break and close above 10,480-level, can trigger a smart move towards the 200-DMA, which is around 10,900. However, we may witness some volatility in the coming days as select key momentum oscillators have turned negative.

Among the key momentum oscillators on the daily charts, the Slow Stochastic has given a negative divergence, hence the market may face some downward pressure. The DI (Directional Index) continues to remain in favour of the bulls, hence one may witness buying interest at lower levels. The MACD (Moving Average Convergence Divergence) and the 14-day RSI (Relative Strength Index) are in 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.