Sensex sheds 6%; Monday’s high crucial hurdle for remainder of the week

Mumbai: The markets have begun the week on a dismal note on the back of negative global cues coupled with extension of lockdown in India, poor March GST data and earnings dis-appointment. After a near 8 per cent rally last week, the benchmark indices have shelved as much as 6 per cent in a single trading session on Monday.

The BSE benchmark index, the Sensex, opened with a negative gap of near about 1,000 points and drifted lower during the course of the day. The Sensex touched a low of 31,632, and finally settled with a loss of 6 per cent (2,002 points) at 31,715.

Banking and financial shares which were the market leaders last week, were the major laggards today. Among the Sensex 30 stocks, ICICI Bank nose-dived by 11 per cent to Rs. 338. Bajaj Finance, HDFC, IndusInd Bank, Axis Bank, Maruti, Tata Steel, Titan, Tech Mahindra, HDFC Bank and Hero MotoCorp slumped 8-10 per cent each. There were only two gainers in the Sensex 30 pack, while Sun Pharma ended with a tad shade of green, Bharti Airtel rallied as much 3.5 per cent.

All sectoral indices, barring the BSE Healthcare and Telecom indices, ended with a bare minimum loss of 3 per cent or so. The BSE Bankex, Finance and Metal indices were the major losers down over 8 per cent each.

The market breadth too was largely negative, with more than 3 declining stocks for every gainer. Out of 2,597 stocks traded today, as many 1,865 stocks declined, while mere 554 advanced. Today, 28 stocks recorded a fresh 52-week high, while 88 stocks registered a new 52-week low.

As per the weekly Fibonacci charts, the Sensex has given a strong sell indication by breaking the weekly S3 (32,135). In case of a recovery the BSE index is now likely to face resistance around the weekly S3 and S1 (32,740). The bias for the remainder of the week is likely to remain negative as long as the Sensex remain below 32,740.

Going into trade on Tuesday, as per the daily Fibonacci charts, the BSE Sensex may seek support around 31,290-31,155-31,025, while in case of an up move the index may face resistance around 32,140-32,275-32,405.

The NSE Nifty has reacted adversely after testing its 50-DMA (Daily Moving Average) at 9,800-odd levels. Off late, the index has seen development of an upward channel since its low of 7,500 on 24 March. Post which, the index has been consistently making higher highs and lows.

The channel trendline indicates considerable support for the Nifty around the 9,000-mark, and so also 20-DMA exists around 9,050. Going ahead, these two levels need to be closely watched to see if the NSE index is able to maintain it is current uptrend. In case, the up-trend remains intact, the next logical targets for the index would be 9,970 and 10,550, which respectively are the 50 per cent and 61.8 per cent retracement level for the recent major fall.

The momentum oscillators are giving a mixed signal. Among the key indicators, the Slow Stochastic and the Directional Index have given a negative divergence on the daily charts. However, the MACD (Moving Average Convergence Divergence) remains in favour of the bulls, while the 14-day RSI (Relative Strength Index) remains in neutral mode.

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