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Mumbai: The markets climbed to fresh six-month highs on the back of renewed buying interest in financial shares, especially banks. Global cues were also largely supportive as the US-based tech index Nasdaq scaled record levels in hopes of a fresh stimulus package for the economy. Nasdaq has gained a whopping 77 per cent from its March lows in mere five months.
Meanwhile, the US Fed chief Jerome Powell on Thursday announced a policy shift, wherein the Central Bank will now adopt an ‘average inflation’ target that could allow inflation to run above its 2 per cent target. However, there was no mention of a stimulus package which the markets have been anticipating for quite some time now.
Also Read: Market Outlook: Global cues to set the trend, US Fed chair Powell’s speech holds the key
Back home, the BSE benchmark index, the Sensex, started the week with a 120-odd point positive gap and just did not bother to look back. The Sensex soared to a high of 39,579 on the last trading day of the week and eventually ended the week with a solid gain of 2.7 per cent (1,032 points) at 39,467.
Among the Sensex 30 stocks, IndusInd Bank skyrocketed by almost 28 per cent. Axis Bank zoomed nearly 16 per cent while SBI soared over 13 per cent. ICICI Bank, Kotak Mahindra Bank and Bajaj Finance surged 8-10 per cent each. HDFC, Sun Pharma, Mahindra & Mahindra and HDFC Bank were the other gainers. On the other hand, NTPC and PowerGrid Corporation shed around 4 per cent each. Hindustan Unilever, Infosys, Bajaj Auto, Larsen & Toubro, Tata Steel and ONGC were the other notable losers.
The BSE Sensex has gained nearly 5 per cent so far this month. The Sensex has been trading with a positive bias on the monthly and quarterly chart. With just one trading session remaining this month, we need to focus on the quarterly and yearly Fibonacci targets.
As per the quarterly Fibonacci chart, the BSE index seems on course to 40,000-mark. Interestingly, the yearly Fibonacci chart indicates some resistance around 39,800-level. In case, the BSE index is able to conquer 39,800-level it can then potentially rally towards 41,250.
As per the weekly Fibonacci chart, next week, in case of an up move the BSE index may face resistance around 39,860-39,980-40,100. Whereas, in case of a decline the Sensex is likely to seek support around 39,070-38,950-38,830.
The NSE Nifty gained 2.4 per cent (277 points) at 11,648. The NSE index is up over 5 per cent so far this month and has surged as much as 55 per cent in the last five months. The Covid-19 induced panic selling in the market earlier this month has turned out to be a blessing in disguise for investors who wanted to buy stocks at a cheaper level.
However, one needs to remember off late the markets have been driven by liquidity, mainly strong flows from the overseas investors. Going ahead, global cues will continue to remain a dominant factor and any turn of events in the US markets can have a cascading effect on our markets.
Having said that, as per the charts the markets seem to be on strong footing with the Nifty trading firmly above key technical levels. Currently, the NSE Nifty is fairly far from its key support levels, the nearest major support for the NSE index is the 20-DMA (Daily Moving Average) at 11,300-odd levels. On the upside, the Nifty may now aim for the 11,900-12,000 range.
Among the key momentum oscillators on the weekly charts, the DI (Directional Index) and the MACD (Moving Average Convergence Divergence) continue to remain clearly in favour of the bulls. The Slow Stochastic is somewhat inconclusive and 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.
