Range-bound activity likely ahead
The immediate breakout level for bulls is 18,600, above which the index could rally towards 18,700; On downside, key support is at 18,500 and a breach could lead to a decline towards 18,375
image for illustrative purpose
Last week, the benchmark indices saw profit booking at higher levels. The NSE Nifty closed at 18,534 points. The Reality index outperformed, rallying around 4 per cent, while the Oil and Gas index declined by over 2.5 per cent. Technically, the index faced consistent profit booking after a strong opening. The weekly chart showed a small bearish candle, indicating a negative trend.
“The medium-term market structure remains positive, but the current activity appears range-bound. The immediate breakout level to watch for bulls is 18,600, above which the index could rally towards 18,700,” says Amol Athawale, Deputy Vice President – Technical Analyst, Kotak Securities.
On the downside, key support is at 18,500 and a breach could lead to a decline towards the 20-day SMA or 18,375. Further downside momentum could take the market to 18,300. For the Bank Nifty, the 20-day SMA at 43,800 is a crucial support level. Trading above it may result in a retest of 44,400, while breaking below could accelerate selling pressure towards 43,500-43,300.
Vinod Nair, Head of Research at Geojit Financial Services, says, “This week the Indian market was volatile, however it was able to regain the momentum led by positive domestic outlook accompanied by global cues.”
Auto stocks garnered attention, as sales numbers for May came in strong, with a sequential recovery boosting sentiment across the sector. The hope that the Fed will refrain from a rate hike has provided comfort to the global equity market.
