Weekly Outlook: Markets in consolidation mode; key supports may be tested

@rex_cano

Mumbai: The markets ended a pretty firm week on a whimper owing to a late sell-off on Friday. Prior to that, the week largely belonged to the bulls as the key benchmark indices climbed steadily moving in a thin range amid stock specific action. Going forward global cues are likely to lead the way with all eyes on the proposed fresh US stimulus deal and build-up to the Presidential election later this year.

In the week under review, the BSE benchmark index, the Sensex, registered an intra-week high at 38,556, and thereafter moved in a range-bound manner until it fell sharply to a low of 37,655 on Friday. The BSE index may have lost as much as 900 points in intra-week deals, but was down a mere 0.4 per cent (163 points) for the week as it settled at 37,877.

Among the Sensex 30 stocks, Larsen & Toubro was the major gainer, the stock soared over 7 per cent. Tata Steel, NTPC, SBI, HCL Technologies, Mahindra & Mahindra, Sun Pharma and ICICI Bank were the other significant gainers. On the other hand, Bharti Airtel was the major loser, down nearly 6 per cent. Bajaj Finance, Kotak Mahindra Bank, TCS, ONGC, Hindustan Unilever, Reliance Industries, Maruti Suzuki and HDFC Bank were the other prominent losers. 

The BSE Sensex, so far, has given a buy signal on the monthly Fibonacci chart. As per the monthly Fibonacci chart, the BSE index seems to be on course to test the 39,000-mark, above which the index may scale towards 39,450 and 39,900. In case of a down side, the Sensex has near support around 37,600-level, below which the BSE index has considerable support in the range of 36,700-36,800. However, sustained trade below 36,700-level can derail the upward momentum.

Also Read: Market Outlook: Bias remains positive; Nifty likely to test 11,400

As per the weekly Fibonacci chart, next week, in case of a downside the Sensex is likely to seek support around 37,530-37,430-37,320. Whereas, in case of an up move the BSE index may face resistance around 38,220-38,330-38,440.

The NSE Nifty had managed to close above the 11,300-mark for three successive trading sessions during the week, but eventually ended 0.3 per cent lower at 11,178. The NSE index had touched a high of 11,374 during the week, before tumbling to a low of 11,111.

As per the daily charts, the NSE index is trading fairly closer to its near term support around the 20-DMA (Daily Moving Average) at 11,170. Sustained trade below this level can trigger a slide towards the lower-end of the Bollinger Band on the daily charts, indicating a target of 10,960-odd level or even lower towards the 200-DMA at 10,850-odd level.

As per the weekly charts, the Nifty has multiple strong supports in the form of 50-WMA (Weekly Moving Average) and 100-WMA at 10,910 and 11,010, respectively. The medium-term trend is likely to remain positive as long as the Nifty sustains above these key levels. 

The market seems to be in a consolidation phase, wherein the lower-end support zone may be tested during the coming trading sessions, hence one needs to be cautious at higher levels. For the upward journey to resume, the Nifty needs to close above 11,270-level on a weekly basis.

Among the key momentum oscillators on the weekly charts, the Slow Stochastic seems to be slightly negative. The MACD (Moving Average Convergence Divergence) and the DI (Directional Index) are in favour of the bulls. The RSI (Relative Strength Index) is 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.