Market Outlook: Volatility may rise ahead of extended weekend, weekly F&O expiry

@rex_cano

Mumbai: It was another choppy day for the markets, as the key benchmark indices once again gyrated between zones owing to alternate bouts of buying and selling. The sentiment seemed to be nervous as key indices neared resistance level and overseas cues too turned sour. Overnight in the US, markets ended on a steady note, but futures fell sharply after day 1 of heated debate between the two Presidential candidates – Donald Trump and Joe Biden. 

The BSE benchmark index, the Sensex, opened 90-odd points higher at 38,069, and then slipped into the negative zone to a low of 37,828. The BSE index, thereafter, rebounded into the positive zone and touched a high of 38,236, but soon pared gains. The Sensex finally ended with a marginal gain of 95 points at 38,068.

Among the Sensex 30 stocks, Tech Mahindra and Titan Industries rallied 3 per cent each. Nestle India, Hindustan Unilever, HDFC Bank, HDFC, ITC and Asian Paints were the other prominent gainers. On the other hand, Bharti Airtel and Tata Steel declined around 3 per cent each. IndusInd Bank, Sun Pharma and Mahindra & Mahindra were the other notable losers.

The BSE Sensex on Wednesday moved precisely within Tuesday’s trading band, thus not indicating any change in stance. Tomorrow, the markets may once again turn volatile owing to the extended weekend on account of Gandhi Jayanti holiday on Friday and also the weekly futures & options expiry. As per the weekly Fibonacci chart, the BSE index is expected to find considerable support in the 37,400-37,450 range, while on the upside the Sensex may rally towards 38,340-38,630.

Also Read: Market Outlook: Nifty likely to face considerable resistance between 11,300-11,330

As per the daily Fibonacci chart, on Thursday, in case of an up move the BSE Sensex is likely to face resistance around 38,225-38,270-38,320. On the other hand, in case of a decline the Sensex may seek support around 37,910-37,860-37,815.

The NSE Nifty for the second straight day faced resistance around its 50-DMA (Daily Moving Average) at 11,300-odd level and then retraced. The Nifty today ended with a minor gain of 0.2 per cent at 11,248. For the month, the NSE index was down 1.2 per cent, but was up over 9 per cent for the quarter ended September 2020.

The short-term trend for the Nifty is now on the verge of turning negative, with the 20-DMA at 11320 and the 50-DMA at 11,305. As and when the 20-DMA falls below the 50-DMA, technically speaking the short-term trend will be negative. The NSE index needs to close above its 20-DMA on a consistent basis to reverse the potential downtrend.

As of now, it seems like the NSE index is likely to face considerable resistance around the 11,300-11,320 area, whereas on the downside the Nifty may drift back towards the lower-end of the Bollinger Band on the daily chart – indicating a downside target of 10,940. On the positive front, in case the Nifty crosses and closes above 11,320, the NSE index may spurt towards 11,500 in a short span of time.

Among the key momentum oscillators on the daily chart, the Slow Stochastic continues to remain in favour of the bulls. The DI (Directional Index) is marginally negative while the MACD (Moving Average Convergence Divergence) is now inconclusive. The 14-day RSI (Relative Strength Index) is still 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.