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Sensex

Trend: The benchmark index has extended profit booking at higher levels for a second consecutive month, dragging the index lower, registering 2% loss. It continues to move higher on a broader timeframe, forming a consistent series of higher tops and bottoms on the long-term chart. This suggests that any upcoming minor corrections toward the identified support zone provide investors with an opportunity for accumulation.

Pattern: The monthly price action has formed a small bearish candle and closed below the previous month’s low, indicating the short-term negative bias. The index is sustaining itself above its 200-day Simple Moving Average (SMA), which reconfirms the primary uptrend.

Momentum: The weekly and monthly RSI are in negative territory, signalling a loss of strength.

Direction: The index is expected to trade with a mixed bias between the 82,700-79,000 levels.

Volatility: The weekly ATR has reached 1,577 points, which means the Sensex currently has a range of 1,577 points for a given week. However, in the daily timeframe, it has been highly volatile throughout the month, with several ups and downs, indicating that volatility may continue to expand in the coming days. INDIAVIX (11.75) has increased by 2%, indicating increased volatility.

Market Breadth: The Sensex closed at 79,810 in the previous month, losing almost 2%. Meanwhile, the BSE Midcap and BSE Smallcap indices lost 2.5% and 3.7%, respectively, indicating that the BSE Smallcap underperformed the BSE Sensex and Midcap indices. Notably, 263 stocks in the BSE 500 index are above their 200-day SMAs, suggesting that the broader trend remains neutral. Additionally, market breadth has increased compared to last month, when 232 stocks were above their 200-day SMAs.

Our Take: For the fourth consecutive month, the Sensex is in consolidation mode and has remained range-bound within a broader range from 83,000 to 79,000, reflecting a short-term sideways trend. The benchmark index is facing stiff resistance from its prior supply zone (83,000-84,000), which remains a critical hurdle, indicating a cautious approach. However, the broader outlook remains bullish, with potential for sector rotation within the ongoing bull market.

Investors are encouraged to adopt a buy-on-dips strategy, as short-term corrections offer attractive entry opportunities. The short to medium-term trend appears neutral to corrective from current levels, with expected upside towards 82,800-83,300 levels. Any violation of the 80,000 support zone may cause profit booking and drag the index towards the 79,000-78,500 levels

Nifty 50

Trend: The benchmark index has extended its price correction from the major supply zone of 25200-25300 levels, registering a 1.38% loss for the second straight month. It continues to move sideways on a broader timeframe, within 25,800-21,800 levels. This suggests that any upcoming minor corrections toward the identified support zone provide investors with an opportunity for accumulation.

Pattern: The monthly price action has formed a small bearish candle and has violated the previous month’s low on a closing basis, indicating negative bias. The index is sustaining itself above its 200-day SMA at 24,092, which reconfirms the primary uptrend.

Momentum: The weekly and monthly RSI are in negative territory, signalling a loss of strength.

Direction: The index is expected to trade with a mixed bias between the 25,300 and 24,000 levels.

Volatility: The weekly ATR has reached 489 points, which means the Nifty currently has a range of 489 points for a given week. However, in the daily timeframe, it has been highly volatile throughout the month, with several ups and downs, indicating that volatility may continue to expand in the coming days. INDIAVIX (11.75) has increased by 2%, indicating increased volatility.

Market Breadth: The Nifty closed at 24,427 in the previous month, losing almost 1.38%. Meanwhile, the NSE Midcap and NSE Smallcap indices lost 2.92% and 4.12%, respectively, indicating that the NSE Small-cap underperformed the Nifty and NSE Midcap indices. Notably, 269 stocks in the NSE 500 index are above their 200-day SMA, suggesting that the broader trend remains neutral. Additionally, market breadth has advanced compared to last month, when 240 stocks were above their 200-day SMA.

Our Take: For the fourth consecutive month, the Nifty is in consolidation mode and has remained range-bound within a broader range from 25,600 to 23,900, reflecting a short-term sideways trend. The benchmark index is facing stiff resistance from its prior supply zone (25,800-25,900), which remains a critical hurdle, indicating a cautious approach. However, the broader outlook remains bullish, with potential for sector rotation within the ongoing bull market.

Investors are encouraged to adopt a buy-on-dips strategy, as short-term corrections offer attractive entry opportunities. The short to medium-term trend appears neutral to corrective from current levels, with expected upside towards 25,300-25,500 levels. Any violation of the 24,400 support zone may cause profit booking towards the 23,800 levels.

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