Weekly Outlook: Nifty completes 61.8% recovery of bear market fall; Bias remains positive

Mumbai: The markets traded with a positive bias almost throughout the week, barring a few blemishes on Thursday due to profit-taking. The mood remained upbeat after the benchmark indices consolidated its position firmly above key technical levels. While the current trend continues to remain positive, the news flow around the pandemic Covid-19, economic slowdown and India-China border dispute may resurface to limit the upside.

In the week under review, the BSE benchmark index, the Sensex, rallied to a high of 35,707 on the back of strong gains across the board. The Sensex finally ended the week at 35,171 – up 1.3 per cent (440 points). The NSE Nifty too was up 1.3 per cent at 10,383, after touching a weekly high at 10,553.

Among the Sensex 30 stocks, Bajaj Finance, Larsen & Toubro and Bajaj Auto were the major gainers, up over 7 per cent each. Infosys, ITC, PowerGrid, Asian Paints and NTPC were the other significant gainers. On the other hand, ICICI Bank and HDFC were the major losers, down around 4 per cent each. Maruti, Bharti Airtel, ONGC, HCL Technologies and Sun Pharma were the other notable losers.

Also Read: Market Outlook: Sensex needs to sustain above 34,730 for the positive momentum to continue

The Sensex almost reached its quarterly Fibonacci target mentioned last week around 35,800-level. As per the monthly Fibonacci chart, the near term bias is likely to remain bullish as long as the Sensex sustains above 34,200-level. However, the next week will also mark the beginning of July, it would be interesting to see how the month starts following three months of successive gains.

As per the weekly Fibonacci charts, next week, in case of an up move, the BSE Sensex may face resistance around 35,630-35,775-35,915, and in case of a down move the BSE index is likely to seek support around 34,710-34,565-34,425. Going forward, it is likely that the market may witness a two-way direction instead of only a north-bound journey.

The NSE Nifty has witnessed an exact 61.8 per cent recovery of the entire bear market fall seen earlier this year. In our weekly outlook dated May 1, we had mentioned how the Nifty could target 10,550, after having achieved the 50 per cent retracement in the corresponding week. The Nifty in a way has completed a major recovery, hence some consolidation or a fresh correction from current levels cannot be ruled out, albeit the bias remains positive.

As per the daily charts, the NSE Nifty may target its 200-DMA (Daily Moving Average) in the coming trading sessions. For which to happen, the NSE index needs to break and close above 10,475. As per the weekly charts, the Nifty may target its 50-WMA (Weekly Moving Average) or its 100-WMA which is currently placed around 10,925 and 11,050, respectively in the coming weeks. The bias on the weekly charts is likely to remain positive as long as the Nifty sustains above 9,850 on a closing basis.

The key momentum oscillators on the weekly charts are indicating a mixed signal. The MACD (Moving Average Convergence Divergence) is positive. The Slow Stochastic is also positive but showing some signs of tiredness, while the DI (Directional Index) is nearing a positive crossover. The RSI (Relative Strength Index) remains in neutral mode.

Disclaimer: The views expressed in this article are personal and for information purpose only, it does not advocate any buy or sell /recommendation. 

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