Market Outlook: Weekly trend for Sensex to remain positive as long as it holds above 36,000

Mumbai: The markets traded on a choppy note for the major part of the trading session, swinging between zones. However, a strong wave of profit-taking in the final hour of trades saw the benchmark indices slide sharply. Given the recent steep rally and overbought conditions it was prudent to expect some profit-taking at higher levels.

The BSE benchmark index, the Sensex, opened 70-odd points higher at 36,738, and soon jumped to a high of 36,828. The BSE index, thereafter, swung between zones, before finally tanking to a low of 36,234 – down almost 600 points from the day’s high. The Sensex eventually ended the day with a loss of 345 points at 36,329.

Among the Sensex 30 stocks, Bajaj Finance shed 4.5 per cent. Asian Paints, Bajaj Finserv, Maruti, HCCL Technologies, Infosys, Titan, TCS, PowerGrid, UltraTech Cement and ICICI Bank declined 2-3 per cent each. On the positive front, IndusInd Bank soared 5 per cent. SBI, Hindustan Unilever, Tata Steel, ITC and Sun Pharma were the other prominent gainers.

Also Read: Market Outlook: Expect profit-taking as Nifty nears 200-DMA; key indicators in overbought zone

As per the weekly Fibonacci chart, the BSE Sensex is still in buy mode, with considerable support expected around the 36,000-mark. The BSE index has crossed the weekly R2, while the weekly R3 stands around 36,915. On the flip side, in case the 36,000-mark fails to hold, then the Sensex can slide towards the 35,700-35,470 level.

As per the daily Fibonacci charts, on Thursday, in case of an up move the BSE Sensex is likely to face resistance around 36,555-36,625-36,695, and in case of a down move, the BSE index may seek support around 36,100-36,030-35,960.

As anticipated, the NSE Nifty has reacted negatively after nearing its crucial hurdle at 200-DMA (Daily Moving Average) at 10,885. The NSE index dropped 0.9 per cent to 10,706 after touching an intra-day high of 10,848. The price-to-moving averages action continues to remain positive, hence it is likely that the NSE index may re-attempt to cross the 200-DMA after some consolidation or correction.

As per the daily charts, the NSE index is likely to find considerable support around 10,500-mark, below which the next major support exists around 10,300-mark, which is also the 20-DMA. On the upside, the Nifty needs to cross and close above the 200-DMA for further gains.

Among the key momentum oscillators on the daily charts, the Slow Stochastic has given a negative divergence and the 14-day RSI (Relative Strength Index) has retreated from the overbought zone. The DI (Directional Index) along with the ADX (Average Directional Index) continues to remain positive, indicating strong possibility of buying support on dips. The MACD (Moving Average Convergence Divergence), however, continues to remain inconclusive.

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