The benchmark indices S&P BSE Sensex and Nifty50 have rallied over 1.50 per cent in the last two days. The Nifty Auto index, however, has mostly remnained range-bound. The index lost 0.50 per cent at 8,710 levels on Thursday.
Except for Bajaj Auto and Bharat Forge which showed minor improvement over their previous close, no other stock in the Nifty Auto index has managed to show a promising trend. Maruti Suzuki, HeroMotocorp, Ashok Leyland and Tata Motors witnessed less participation from the market participants.
The technical chart (Nifty Auto) shows a bullish formation of double-bottom. However, the index has failed to cross significant levels. 8000 seems to be a point that can witness buying momentum, as it hold the two lows of the double-bottom formation. The index did manage to cross the 8800 mark three days ago, but failed to sustain momentum after a sustained selling pressure.
The 100-days moving (DMA) coincides with the breakout level of 8800 in the daily chart. To move higher, the index needs to cross this amid decisive volume. The weekly chart appears to highlight 8950 to be a trend-line resistance for the upward trend. A bigger breakout is expected only when the index crosses this pressure zone of 8800 - 8950 levels.
The support comes at 50 DMA, currently placed at 8500 level. The overall trend still stays positive as major sell-off is not seen in auto stocks. Even if index manages to settle above 8500, one can expect 8950 levels in the sessions ahead, chart suggest. From a medium-term perspective, 8000 holds the key on the downside.