Market Outlook: Sensex test 39K, needs to sustain above it for fresh gains

@rex_cano

Mumbai: The markets opened on a positive note as global cues were supportive. The BSE benchmark index, the Sensex, opened 150 points higher at 38,948, and soon jumped to a high of 39,009. Profit-taking at higher levels saw the BSE index slip into the negative zone to a low of 38,680. However, the Sensex eventually ended 45 points higher at 38,844.

Among the Sensex 30 stocks, Bajaj Finance soared nearly 4.5 per cent and SBI rallied 3.3 per cent. Tech Mahindra, Asian Paints, Bajaj Finserv, ICICI Bank, IndusInd Bank, Axis Bank, Mahindra & Mahindra and Kotak Mahindra Bank advanced 1-2 per cent each. On the flip side, NTPC, Sun Pharma, Nestle India, Tata Steel, Larsen & Toubro, Infosys and Bajaj Auto declined 1-2 per cent each.

The BSE Sensex today tested its first projected upside target at 39,000-level as per the monthly Fibonacci chart, and then retraced a wee bit after that. Going ahead, the BSE index needs to sustain above the 39,000-level for fresh gains to emerge. As and when the Sensex conquers 39,000, the index can potentially rally towards its next upside targets at 39,450 and 39,900, respectively.

Also Read: Market Outlook: Sensex, Nifty continue to trend higher; bias remains positive

Today, on the downside the BSE index took support precisely around the support level mentioned yesterday. As per the weekly Fibonacci chart, the key support level for the remainder of the week will remain 38,665. Sustained trade below 38,665 can trigger a fresh correction in the market.

As per the daily Fibonacci charts, on Wednesday, in case of an up move the BSE Sensex is likely to face resistance around 38,970-39,010-39,050, and in case of a down move, the Sensex may seek support around 38,720-38,680-38,640.

The NSE Nifty gyrated in a 100-odd point range, from a high of 11,526, the index dropped to a low of 11,423, but finally settled a tad higher at 11,472. The Nifty for the second straight day tested the higher-end of the Bollinger Band on the daily charts, but failed to conquer it.

While the bias remains positive, it seems that the NSE index needs some fresh trigger to break above the higher-end of the Bollinger Band. The trigger could be in the form of any positive news development either locally or overseas. Till such time that the Nifty does not break above the higher-end of the Bollinger Band, there remains the possibility of dips towards the 20-DMA (Daily Moving Average), which is currently around 11,250.

Among the key momentum oscillators on the daily charts, the DI (Directional Index) continues to remain positive. The Slow Stochastic has also given a fresh minor buy indication. The MACD (Moving Average Convergence Divergence), however, remains inconclusive and the 14-day RSI (Relative Strength Index) is nearing the overbought zone.

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