Sentiment remains tentative
The markets continued their downward journey last week amidst high volatility on account of weak domestic and global cues before witnessing a smart rebound on Friday on the back of positive news flow. The Nifty breached the 10150 mark early during the week due to sustained selling pressure. However, the markets managed to close the week above this level on the back of bargain buying and short-covering. The FIIs continued to be net sellers in the cash segment but remained net buyers in the derivatives segment. The DIIs continued to support the markets at the lower levels and remained net buyers. The breadth of the market remained negative amidst low volumes. On the global front, crude oil prices moved lower with Brent trading around $81/barrel. On the domestic front, the Q2 earnings season has started on a sound note with TCS delivering another set of good numbers with a positive future outlook. The government plans to take measures on oil prices and liquidity crunch. Technically, the prevailing positive technical conditions helped the markets bounce back. The Stochastic, KST and
RSI are all placed above their respective averages on the daily chart. Further, the Stochastic is placed in the oversold zone on the weekly chart. Moreover, the Nifty’s 50-day SMA is placed above its 100-day SMA and 200-day
SMA and its 100-day SMA is placed above its 200-day
SMA, indicating a ‘golden cross’ breakout. These positive technical conditions could lead to short-covering and follow-up buying support.
The prevailing negative technical conditions, however, still hold good and could weigh on the market sentiment.
The Stochastic, MACD, KST and RSI are all placed below their respective averages on the weekly chart. The Nifty is still placed below its 50-day SMA, 100-day SMA and 200day SMA. These negative technical conditions could lead to intermediate bouts of profit-booking and selling pressure especially at the higher levels.
The -DI line is placed above the +DI line and the ADX line and above 37. But it has come off its recent highs, which indicates that the sellers are covering shorts. The ADX line is placed above 47.
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The Nifty has managed to sustain above 11200, which augurs well for the markets. It is important for the Nifty to sustain above 11400 for selling pressure to ease and to move higher to test 10589. Below 10200, the Nifty could fall further to test 10000 due to intensified selling pressure. The market sentiment remains tentative. Regular follow-up buying support is needed for the markets to come out of the current turmoil.
Rupee and crude oil prices remain a challenge for the Indian economy. Let’s see how the government handles it ahead of the elections. Meanwhile, the markets will take cues from the earnings season, global markets, Dollar-Rupee exchange rate and crude oil prices. Technically, the Sensex faces resistance at the 34937, 35322, 36350, 37165, 37630, 38250, 38761 and 38989 levels and seeks support at the 34344 and 32596 levels. The resistance levels for the Nifty are placed at 10589, 10748 and 10808 while its support levels are placed at 10419, 10340, 10283, 10000, 9958, 9827 and 9735.