Market Outlook: Short-term bias remains negative; Nifty may test 10,750-level

@rex_cano

Mumbai:

After robust gains in the preceding two months, the markets today started the month of August on a dismal note, as traders opted to take home profits following the steep rally. Elsewhere, global cues were mostly mixed.

The BSE benchmark index, the Sensex, opened a wee bit in red at 36,596 (down 11 points) and continued to slip deeper into red as the day progressed. Unabated selling pressure in select financial shares saw the BSE index slide to a low of 36,911 towards the end of the trading session. The Sensex finally ended with a loss of 667 points at 36,940.

Among the Sensex 30 stocks, Kotak Bank and IndusInd Bank plunged around 4 per cent each. Axis Bank, ONGC, HDFC Bank, Bajaj Auto, Reliance Industries, Bajaj Finance, HDFC, Sun Pharma, Bajaj Finserv and UltraTech Cement were the other major losers, down 2-3 per cent each. Titan, however, surged 3 per cent followed by Tata Steel, up 2 per cent. 

The BSE index has started August on a negative month, as per the monthly Fibonacci chart, the BSE index has near support around 36,800-level, below which the index can slide all the way to 36,200-odd levels.

As per the weekly Fibonacci chart, the BSE Sensex is within striking distance of its S3 (support) at 36,875-level. In case the Sensex drops below it, then the bias for the remainder of the week can become negative unless and until the BSE index stabilizes above 37,350-level.

As per the daily Fibonacci charts, on Tuesday, in case of an up move the BSE Sensex is likely to face resistance around 37,200-37,280-37,360, and in case of a down move, the BSE index may seek support around 36,680-36,600-36,515.

As anticipated in our weekly outlook, the NSE Nifty extended its losses and sought support around the key moving averages of 20-DMA (Daily Moving Average) and 200-DMA at 10,960 and 10,860, respectively. The NSE index in trades today, after briefly halting around the 20-DMA finally ended within striking distance of its 200-DMA at 10,892 – down 1.6 per cent.

As per the daily charts, the bias seems negative in the near term. Select momentum oscillators too are in favour of the bears. The NSE index needs to cross and sustain above the 20-DMA in order to reverse the current corrective move. On the downside, the Nifty has near support around the 200-DMA, below which the index may seek support around the Super Trend line around 10,750-level.

Among the key momentum oscillators on the daily charts, the Slow Stochastic continues to remain in favour of the bears. The MACD (Moving Average Convergence Divergence) too has given a marginally negative divergence. The DI (Directional Index) is positive, while the 14-day RSI (Relative Strength Index) is 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.