60,400 level breakout zone for bulls

Mumbai: The benchmark indices continued range-bound activity for two sessions in a row as BSE Sensex was up by 181 points on Wednesday. Among sectors, Reality index rallied over one per cent whereas metal stocks witnessed intraday profit booking.

“Technically, after a reversal formation the market is hovering between 59,900 and 60,400 price ranges. For the bulls now, the 60,400 would be the range breakout zone,” says Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.

Above which, the market could move up till 60,700-60,900. On the flip side, dismissal of 59,900 may accelerate the selling pressure and below this level, the index could slip till 59,700-59,600 points.

S Hariharan, head (institutional equity sales), Emkay Global Financial Services, said: “The external liquidity environment is turning adverse, as seen in terms of rising volatility in US bond markets. This is partly influenced by concerns of an early debt ceiling showdown in US Congress and partly by expectations of a further rate hike from Fed in May.”

Domestically, strong numbers from the few large-caps that have reported results have failed to produce the requisite follow-on strength that would indicate additional deployment by institutional investors. Domestic retail investors continue to participate in the wider small-cap universe, but momentum at the headline index level appears to be stalling in the near-term. Bank Nifty, in particular, after having led the market rally since late March, has started losing momentum and appears vulnerable to a sizeable pull-back, he added.

CPSE index appears the strongest placed (breaking out to new highs), while Consumer discretionary sector appears weakest from a technical perspective for the coming fortnight.