Weekly Outlook: Bias remains positive; global cues likely to dictate terms

@rex_cano

Mumbai: Following last week’s minor loss, the markets have bounced back smartly amid positive global cues. The US markets have been trading near life-time highs on the back of expectations of a fresh stimulus package and initiatives to revive its economy ahead of the all-important Presidential election in November 2020. Markets across the globe are likely to take cues from the US markets for now.

In the week under review, the BSE benchmark index, the Sensex, after starting on a tepid note, firmed up as the week progressed and touched a fresh six-month high at 38,789. Some profit-taking thereafter saw the BSE index pare some gains. The Sensex finally ended the week with a gain of 1.5 per cent (557 points) at 38,435.

Among the Sensex 30 stocks, NTPC zoomed as much as 20 per cent after the government stepped in to ease liquidity issues for power distribution companies. Asian Paints and PowerGrid Corporation soared 9 per cent and 8 per cent, respectively. Maruti Suzuki, ONGC, HDFC Bank, ICICI Bank, Tata Steel, Kotak Mahindra Bank, Bajaj Auto and Bajaj Finance were the other major gainers. On the other hand, Tata Motors slipped nearly 3 per cent. Bharti Airtel and Reliance Industries were the other notable losers.

Also Read: Market Outlook: Bias remain positive; key support levels need to be closely watched 

After giving a ‘Buy’ signal on the monthly Fibonacci chart, the BSE Sensex came within striking distance of its projected target of 39,000-level as the index touched a high of 38,789. Having said that, the bias for the current month still remains positive, as the Sensex remains firmly above the key support mark of 37,600. One needs to wait and see if the BSE index re-attempts to test the 39,000-level and if the Sensex is able to conquer it, and then the index can potentially spurt to 39,450 or 39,900-level.

As per the weekly Fibonacci chart, next week, in case of a decline the Sensex may seek support around 38,030-37,900-37,780. Whereas, in case of an upside the BSE index is likely to face resistance around 38,840-38,960-30,090.

The NSE Nifty rallied 1.7 per cent to finish at 11,372, its highest weekly close since February 17, 2020. Post February 17, the NSE index plunged over 33 per cent in mere six weeks to a weekly closing low of 8,084 on March 30. In the following 20 weeks the Nifty has gained as much as 40.7 per cent from the lows, but is still down another 6 per cent from the February 17 close.

The bias for the Nifty continues to remain bullish as the NSE index trades firmly above multiple key support levels. The short-term bias for the Nifty is likely to remain positive as long as the index sustains above the 50-WMA (Weekly Moving Average) and the 100-WMA at 10,920 and 11,015, respectively. On the upside, the NSE index needs to break and close above 11,500 for a dash towards 11,800.

Among the key momentum oscillators on the weekly charts, the MACD (Moving Average Convergence Divergence) and the DI (Directional Index) continue to remain in favour of the bulls. The Slow Stochastic has also turned marginally positive, while the 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.