Mumbai: The markets exhibited solid strength in trades on Wednesday on the back of renewed buying interest in beaten down select auto and financial shares. The BSE benchmark index, the Sensex, rallied to a high of 30,878 towards the fag end of the day and ended on a firm note at 30,819 – up 622 points.
With just two trading days remaining in the week, it must be noted that despite the gains in the last two trading days, the BSE index is still down around a per cent on a week-on-week basis. Hence, further up move from current levels can run into resistance around the weekly close at 31,100-odd level.
Here, it is also worth mentioning that the BSE index has so far not taken a confirm support on the weekly Fibonacci chart. As per the weekly Fibonacci chart, in case, the BSE index fails to conquer 31,100-odd level, we could witness a slide towards the weekly S3 (support) around 29,815-odd level. To sum it up, the Sensex may move in a broad range of 29,815 – 31,100 in the next two trading sessions.
Further, the monthly Fibonacci charts also indicate that the BSE index may test its monthly S3 level around 29,770, in case of persistent weakness. The upside, as per the monthly charts seemed to be capped around 31,280 and 32,300-odd levels for the remainder of the month.
On Thursday, as per the daily Fibonacci charts, the BSE Sensex may seek support around 30,545-30,460-30,375, while in case of an up move the BSE index may face resistance around 31,095-31,180-31,265.
As highlighted over the last couple of days, the NSE Nifty has managed to sustain around current levels due to tepid ADX index on the daily charts, which indicates that neither the bulls nor the bears are strong enough currently. However, now the daily and weekly charts are showing a divergent trend, while the daily charts are tilting slightly in favour of some up move, the weekly charts indicate that the bears are tightening their grip.
Hence, one needs to be very cautious at current levels, especially on the long side of trade. The 8,800-level on the charts is a very crucial support for the Nifty going forward, a break and close below it the 8,800-level could spell further weakness for the markets.
Any upside, is likely to be capped around 9,200-9,240 odd levels, where the 20-DMA (Daily Moving Average) and the 50-DMA converge. Among the key momentum oscillators – the MACD (Moving Average Convergence Divergence) which had given a negative crossover is now indicating a possibility of sideways movement. The Slow Stochastic which has reached oversold territory has now given a positive divergence.
While the DI (Directional Index) remains in favour of the bears, the ADX (Average Directional Index) continues to signal lack of strength for either bulls or bears. The 14-day RSI (Relative Strength Index) continues to remain in neutral mode.
Disclaimer: The article is for information purpose only and does not advocate any buy or sell /recommendation.
