Market Outlook: Upside may be limited; 11,650 likely to remain a key hurdle for the Nifty

@rex_cano

Mumbai: Mirroring positive cues from the US markets, our markets started the day on an optimistic note and went on to build gains as the day progressed. The bias was largely positive also owing to some bargain hunting following the recent fall and short-covering due to the weekly derivatives expiry.

The BSE benchmark index, the Sensex, opened with a positive gap of 225 points at 38,517. Thereafter, the BSE index touched a low of 38,367 before resuming its up move. The Sensex surged to a high of 38,878 and finally ended with a solid gain of 646 points at 38,840.

Among the Sensex 30 stocks, Reliance Industries soared over 7 per cent. Asian Paints, Axis Bank, IndusInd Bank, UltraTech Cement and Bajaj Finance rallied 2-4 per cent each. On the other hand, Tata Steel slipped over 2 per cent and Bharti Airtel down over a per cent was the other prominent loser.

Also Read: Market Outlook: Benign global cues may see our mood may turn cautiously optimistic

The Sensex as anticipated re-tested its weekly high and also bettered it. However, as mentioned yesterday one needs to be cautious at higher levels, especially closer to 39,300-level for the BSE index has given a minor sell signal on the monthly Fibonacci chart. Hence, it seems like the upside may be limited for now. As per the monthly chart, the BSE index is likely to re-test its low or slide below 37,935 level during this month.

Going ahead the BSE index has a minor hurdle around 39,030-level, above which the Sensex is likely to re-test its monthly high around 39,236, which is quite closer to its key monthly hurdle at 39,300. 

As per the daily Fibonacci charts, on Friday, in case of an up move the BSE Sensex is likely to face resistance around 39,035-39,095-39,155. Whereas, in case of a decline the Sensex may seek support around 38,645-38,585-38,525.

The NSE Nifty has bounced back above its 20-DMA (Daily Moving Average) for the first time in five trading sessions. The NSE index surged to a high of 11,464 and ended firmly at 11,449 – up 1.5 per cent. Select momentum oscillators have also turned favourable, thus indicating that Wednesday close at 11,280-odd level can be considered as a near term support for the NSE index.

Going forward, sustained trade above its 20-DMA, which is currently at 11,410-odd level, is likely to augur well for the Nifty. On the upside, the NSE index may aim to test the higher-end of the Bollinger Band on the daily charts, which is closer to the 11,700-level. More importantly, the NSE Nifty needs to close above 11,650 in order to signal an end to this corrective phase.

Among the key momentum oscillators on the daily charts, the Slow Stochastic has given a positive divergence. The DI (Directional Index) too is on the verge of turning positive. However, the MACD (Moving Average Convergence Divergence) continues to remain negative and the 14-day RSI (Relative Strength Index) remains in the neutral zone.

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