Nifty may seek support around the 20-DMA

Mumbai: A late sell-off on the Dalal Street forced the markets end in the negative zone for the second straight trading session. The markets traded with a positive bias for a major part of the day aided by positive overseas cues.

The BSE benchmark index, the Sensex, touched a high of 32,264 in opening trades, but eventually dropped to a low of 31,404 – an intra-day fall of 860-odd points. The Sensex finally ended with a loss of 262 points at 31,354.

PSU banking major – SBI was the top loser, down 4.6 per cent at Rs. 171 in today’s trading session. Bajaj Finance, Asian Paints and Axis Bank slipped around 3.5% per cent each. Kotak Bank, ICICI Bank, Hindustan Unilever, HDFC, Sun Pharma, UltraTech Cement and Hero MotoCorp were the other prominent losers.

On the other hand, Mahindra & Mahindra and Power Grid rallied around 3 per cent each. ONGC, Reliance, NTPC and HCL Technologies were the other notable gainers.

Among sectors, the BSE Realty index tanked 3 per cent and the Bankex dropped 2.5 per cent. The FMCG, Capital Goods, Metal and Healthcare indices were the other major losers.

The market breadth was once again fairly negative, with nearly 2 declining stocks for every single gainer. Out of 2,587 stock traded on the BSE today, as many 1,561 stocks declined, while 838 advanced. A total of 32 stocks registered a fresh 52-week high today, while 99 stocks touched a new 52-week low.

Wednesday could be an interesting day in trade if global cues remain benign. 

The BSE Sensex is quite close to its monthly S1 (31,280). If the index is able to sustain above this level, the index may attempt a pull-back towards 32,700-odd levels. Having said that, let us reiterate that the bias for the week is likely to remain negative for the week as long as the index remains below 32,740 – odd level.

The monthly Fibonacci charts, indicate next major support level for the Sensex around 30,525-29,770. As per the daily Fibonacci charts, the Sensex on Wednesday may seek support around 31,125-31,025-30,920, while in case of an up move the index may face resistance around 31,780-31,885-31,985.

The NSE Nifty ended almost a per cent lower at 9,206, and is now within striking distance of its significant support level, the 20-DMA around 9,080-odd level. The 20-DMA alongside the trend-line support around 8,940-odd level are the key levels to watch out in the near term. The short term bias is likely to remain positive as long  as these levels hold.

In case of a pull-back, the first major resistance for the Nifty would be around 9,530-odd level followed by the 50-DMA around 9,720; above which the index could rally all the way up to 9,970 to 10,550-odd levels.

The momentum oscillators are giving a mixed signal. Among the key indicators, the Slow Stochastic is in favour of the bears, while the MACD (Moving Average Convergence Divergence) is in favour of the bulls. The Directional Index and the 14-day RSI (Relative Strength Index) are in neutral mode.

Disclaimer: The article is for information purpose only and does not advocate any buy or sell recommendation.