The markets have been in a corrective mode since the start of the month November. The sudden demonetisation move by the Narendra Modi government and the surprise election victory of Donald Trump in the US Presidential Elections, have kind-off further dampened the market sentiment.
The NSE Nifty has shed as much as 6.4 per cent in the 13 trading sessions so far this month. The intra-day volatility which had increased post the demonetisation move, seems to have settled down towards the end of the week.
The near term outlook for the NSE index remains negative, as the key benchmark index trades below short-term moving averages. However, in the near term, given the oversold conditions and positive divergence in select momentum oscillators, we could see some positive in the coming week.
The Stochastic Slow in particular is showing some signs of hope for the bulls. On the other hand, the other key momentum oscillators like the MACD (Moving Average Convergence Divergence) and Directional Index remain in favour of the bears. Hence, we may see some temporal relief, while the broader trend will continue to remain negative.
The Nifty is likely to consolidate in a broad range of 8,000-8,300, until we witness a fresh break on the either side.
The BSE Sensex is hovering way below its monthly and quarterly charts, and now testing support on the yearly charts. As per the yearly Fibonacci charts, frequent trade below 26,100-odd level opens the door for a dip toward 25,000 and 24,100 in the near term.
As per the quarterly Fibonacci charts, the bias till the end of December is likely to remain bearish as long as the BSE index sustains below 26,600-27,100 odd levels.
As per the weekly Fibonacci charts, the Sensex next week is likely to seek support around 25,880-25,800-25,715, while on the upside can face resistance around 26,420-26,500-26,585.
(Disclaimer: The views expressed in the article are of the author alone and for information purpose only.)