Weekly Outlook: Upside may be limited; 39,300 likely to be key hurdle for the Sensex

@rex_cano

Mumbai: Despite trading with a negative bias for the major part of the week, the markets eventually ended the week on a positive note owing to renewed buying interest at lower levels. Hopes of de-escalation of tension between India-China and talks of economy boosting measures by the Central government helped turn the sentiment favourable. 

The BSE benchmark index, the Sensex, struggled to sustain at higher levels in the early part of the trading week and touched a low of 37,935 – down around 430 points from the previous week’s close. The BSE index, however, bounced back smartly to a high of 38,973 on account of renewed buying interest, mainly in Reliance Industries. In the process, the Sensex ended the week with a gain of 1.3 per cent (497 points) at 38,855.

Among the Sensex 30 stocks, index heavyweight Reliance Industries zoomed nearly 12 per cent to a fresh life-time high. Asian Paints, TCS, HCL Technologies, Infosys and Hero MotoCorp rallied 2-5 per cent each. On the other hand, Bharti Airtel and ONGC slumped nearly 6 per cent each. NTPC, HDFC Bank, Kotak Mahindra Bank, Tata Steel, Mahindra & Mahindra, Larsen & Toubro, SBI and Axis Bank declined 2-5 per cent each.

Also Read: Market Outlook: Upside may be limited; 11,650 likely to remain a key hurdle for the Nifty

Going ahead, global cues in the backdrop of the upcoming US Presidential election, developments with regards to the India-China border dispute and updates related to the Covid-19 vaccine could weigh on the market mood. Next week, bank stocks could be in focus as the banks are supposed to submit one-time loan recast plans to the Centre and RBI by September 15.

As per the monthly Fibonacci chart, the BSE Sensex has given a minor sell signal at 37,935. As per the monthly chart the upside for the BSE index is likely to be capped around 39,300-level. Whereas on the downside, the BSE index is likely to drift towards 37,500-level or further lower to 37,080-36,710 during the course of the month. However, a close and sustained trade above 39,300 can negate the sell signal.

As per the weekly Fibonacci chart, next week, in case of an up move the BSE index is likely to face resistance around 39,250-39,370-39,500. In case of a decline the Sensex may seek support around 38,460-38,330-38,210.

In the first half of the week, the NSE Nifty struggled below its 20-DMA (Daily Moving Average) and thereafter drifted towards the lower-end of the Bollinger Band and then bounced back above its 20-DMA. The Nifty touched a low of 11,185, and then surged to a high of 11,494 before settling with a gain of 1.2 per cent (130 points) at 11,464.

The NSE Nifty seems on course to test the higher-end of the Bollinger Band on the daily charts at 11,700-odd level. The NSE index is likely to face considerable resistance around 11,650-11,700 and on the downside, the index may test its 100-WMA (Weekly Moving Average) at 11,050-odd level. The Nifty may consolidate in the broad range of 11,050-11,650 till the time we see a fresh breakout in either direction.

Among the key momentum oscillators on the weekly charts, the DI (Directional Index) and the MACD (Moving Average Convergence Divergence) continue to remain in favour of the bulls, while the Slow Stochastic is negative. 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.