Follow-up support needed at higher levels
The markets witnessed a smart rally last week crossing the 10600 mark on Friday but closing a little below it. The markets respected the psychologically important 10K support level and bounced back with a vengeance. Positive news flow on the domestic front and falling crude oil prices helped improve the market sentiment. The settlement of the RBI-Finance Ministry spat also triggered the rally. 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 positive amidst low volumes. On the global front, crude oil prices continued to remain soft on account of higher production. However, Iran sanctions from 5th November could push crude oil prices higher. On the domestic front, the earnings season remained a mixed bag. Technically, the prevailing positive technical conditions helped the markets bounce back with a vengeance. The Stochastic, KST and RSI are all placed above their respective averages on the daily chart. Further, the Stochastic is placed above its average and in the oversold
territory on the weekly chart. These positive technical conditions could lead to regular buying support. The prevailing negative technical conditions, however, still hold good. The MACD, KST and RSI are all placed below their respective averages on the weekly chart. Further, the MACD is placed below its average on the daily chart. The Stochastic is placed in the overbought zone on the daily chart. Moreover, the Nifty is still placed below its 50-day SMA, 100-day SMA and 200-day SMA. These negative technical conditions could lead to profit-booking and selling pressure, especially at the higher levels.
The +DI line has moved above the -DI line and is placed above
27, which indicates that the buyers are gaining strength. The
ADX line is placed above 32. The Nifty found support at the 10K level, which augurs well for the markets sentiment. Now, it is important for the Nifty to move and sustain above the resistance level of 10589 for further buying support to be witnessed and move higher to test the resistance levels of 10748-10808. 10400 is an important support level followed by 10200. The markets will need regular follow-up buying support at the higher levels for the Nifty to test 10800.
Iran sanctions from 5th November could weigh on the market sentiment going forward. Meanwhile, the markets will take cues from the earnings season, Dollar-Rupee exchange rate, global markets and crude oil prices. Technically, the Sensex faces resistance at the 35322, 36350 and 37165 levels and seeks support at the 34937, 34344, 33723, 32972 and 32483 levels. The resistance levels for the Nifty are placed at 10589, 10748, 10808 and 10936 while its support levels are placed at 10419, 10340, 10283, 10200, 10000, 9958, 9827 and 9735.