Range bound action possible in near future

Mumbai: This week, the benchmark indices continued positive momentum. After a promising rally, Sensex was up by 534 points. Among sectors, IT index outperformed and gained over 4 per cent whereas banking and financial stocks witnessed some selling pressure at higher levels.

During the week, the market held the positive momentum and after long time it surpassed important level of 50 day SMA (Simple Moving Average) which is largely positive. On intraday charts, the index is holding higher bottom formation and on weekly charts, it has formed bullish candle, which supports further uptrend from the current levels.

“We are of the view that, the larger texture of the market is positive but due to temporary overbought conditions we could see a range bound action in the near future. For the traders now, 50 day SMA or 65,400 and 65,000 would act as a key supports zone while 66,400-66,600 could act as a crucial resistance zone for the short-term traders,” says Amol Athawale, Vice President - Technical Research, Kotak Securities.

For traders buying near supports areas and selling near resistance levels would be the ideal strategy. For Bank Nifty, 20 day SMA or 43,400 could be the sacrosanct support zone. Above which, the bank Nifty could retest the level of 50 day SMA or 44,200. Further upside may also continue which could lift the index till 44,500.

Although risk on sentiment had returned to the markets in recent sessions, global uncertainty would continue to dictate trends and keep investors on tight leash.