50-day SMA key for follow-up buying support
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The markets remained volatile as they struggled to sustain at higher levels on lack of conviction and follow-up buying support. However, the Nifty bounced back from the 9750 level, which is a positive for the markets. The FIIs remained net sellers in the cash segment but remained net buyers in the derivatives segment. The DIIs, however, remained net buyers during the week and were seen supporting the markets at regular intervals. The breadth of the market remained neutral amidst low volumes, which indicates lack of confidence at higher levels. Crude oil prices remained rangebound between $48-53 due to a fall in inventory but high output levels are likely to weigh on the sentiment. The US markets witnessed buying support at the lower levels. Technically, the prevailing positive technical conditions helped the markets bounce back above the 9750 support level. The MACD, Stochastic, RSI and KST are all placed above their respective averages on the daily chart. Further, the Nifty is placed above its 50-day SMA, 100-day SMA and 200-day SMA. The Nifty’s 50-day SMA is placed above its 100-day and 200-day SMA, its 100-day SMA is placed above its 200-day SMA indicating a ‘golden cross’ breakout.
These positive technical conditions could lead to follow-up buying support at higher levels.
The prevailing negative technical conditions, however, still hold good. The MACD, Stochastic, KST and RSI are all placed below their respective averages on the weekly chart, which could lead to profit-booking and selling pressure at higher levels.
The -DI line is placed above the ADX line and the +DI line and also above 29. But it has come off its recent highs, which indicates that the sellers are covering shorts regularly.
The Nifty has found support and bounced back above the
9750 level, which augurs well for the markets. It is important for the Nifty to sustain above its 50-day SMA in order to move higher and test the 9915 level followed by 10000.
The market sentiment remains cautiously positive. Intermediate bouts of volatility and choppiness are likely to be witnessed due to the F&O expiry on Thursday this week. In the meanwhile, the markets will take cues from the earnings season, Parliament session, global markets, Dollar-Rupee exchange rate and crude oil prices. Technically, the Sensex faces resistance at the 31610, 32273 and 32325 levels and seeks support at the 30921, 30680 and 29365 levels. The resistance levels for the Nifty are placed at 9915, 10000 and 10115 while its support levels are placed at 9838, 9790, 9750, 9638 and 9500.