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Have the Sensex, Nifty bottomed out? Here is what technical charts say

Going forward, any weakness in Nifty50 should see buying with support staying around 9,500 – 9,400 levels
Markets ended an eventful week with significant gains on Friday. The indices made a sharp recovery after the Nifty50 hit a lower circuit filter for the day. The S&P BSE Sensex closed 1,325 pts, or 4.04 per cent, higher at 34,103 and the Nifty50 index a tad above 10,000 level at 10,023.65, up 433 points, or 4.54 per cent.

For the week, however, the S&P BSE Sensex witnessed the worst five days in over a decade – down 11.35 per cent, while the Nifty50 slipped 11.6 per cent during this period.

US markets, too, notched up gains on Friday – the best ever intra-day rally since 2008. The Dow rose 1,985 points, or 9.4 per cent, to 23,185.62. The S&P 500 jumped 230.38 points, or 9.3 per cent, to 2,711.02. The Nasdaq Composite added 673.07 points, or 9.3 per cent, to 7,874.88.

So, will this up move in the equities last? While the jury is still out on how long the coronavirus pandemic will continue to impact businesses and the economy, the candlestick formations on the benchmark indices back home show a ‘Bullish Engulfing’ pattern. This suggests a change in sentiment to positive. Normally, such a pattern sees the markets close with a positive bias in the immediate sessions. If that occurs, then an upside with short-term bottom may be formed.

Here is how the indices look on the charts and the key levels you should keep a tab on.

NIFTY 50: With the sharp recovery see last Friday, the correction seems to have taken a halt for now.  Going forward, any weakness should see buying with support staying around 9,500 – 9,400 levels. We can expect this turnaround to stay as the worst seems to be getting over now. On the higher side, a decisive close above 10,500 levels may further strengthen the upside move. Although major technical indicators are not indicating any aggressive reversal, the index itself is showing strength after a massive correction.

S&P BSE SENSEX: After having broken the 30,000 mark, the index has revived with strong optimism. Not only it closed in positive territory, it even managed to cross previous day’s high of 34,472 levels. This rally may see further upside towards 36,000 levels, which is the next major resistance. The support remains in the range of 32,700 – 32,200 levels. One may see strong selling pressure at higher levels. That said, till index holds 32,200 levels, the upside bias should prevail. 

NIFTY BANK: The index managed to close near the 200-weekly moving average (WMA) located at 25,187 levels. A recovery of 3,800 points in a single session indicates underlying strength. That’s said, a major resistance is seen at 27,000 and till this is not conquered, one can expect selling on a rise. The immediate resistance is located at 26,000 and then at 26,400 levels. The support remains in the range of 24,000 – 23,700 levels. 

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