How to play the markets ahead of RBI's policy review

For now, the S&P BSE Sensex is trading well above the 50-DMA and is showing positive sentiment, which is likely to persist for some more time

BSE Sensex: Although the index gave a close above the trend line resistance at 40,140, but could not give a confirmed breakout as per charts. As the Sensex moves up from the current levels, there can be some selling pressure / profit booking, charts suggest. The gap-up range of 38,001 to 38,570 becomes a support, which seems index should retest before rising strongly. The immediate support comes in at 39,350 levels, after which the index can head to 38,500 – 38,900 levels. For now, it is trading well above the 50-DMA and is showing positive sentiment, which is likely to persist for some more time. SEE THE CHART HERE

Nifty 50: After a strong close at an all-time high of 12,088, the index started witnessing profit booking. Although the recent robust rally shows a massive rise of over 8 per cent from the low of 11,108 levels, the actual jump is 2 per cent from the earlier high of 11,856. The current strength indicates profit booking at higher levels. That said, there is no doubt that the positive sentiment remains strong, but one needs to analyse the follow-up buying. From a medium-term perspective, till the index is trading above 100-days moving average (DMA) placed at 11,270, positive bias stays high. The immediate trend suggests the profit booking is justified at current levels and traders can wait for buying opportunities on correction in the range of 11,800 – 11,600 levels. SEE THE CHART HERE

Nifty Bank: The index is showing a consolidation pattern in the range of 31,200 -31,800 levels. The candlestick formation reveals a close fight of bulls and bears to dominate the next move. Another view visible as per charts is a ‘flag pattern formation’, which is not tilted downward. However, the price has rallied sharply upward forming a pole. As a result, there can be observe short-covering if the resistance range of 31,800 – 32,000 is conquered. In such a case, fresh rally can lead to 32,700 and even higher levels going ahead. SEE THE CHART HERE

Nifty Auto: The weekly chart shows a death cross of 50-WMA (weekly moving average) with 200-WMA inducing bearish sentiment. A ‘falling channel’ pattern further dampened the revival, as reversal failed to cross significant resistance levels. Every rise has seen selling pressure and till index does not conquer the 8600 mark, one needs to stay away from building long positions. A consolidation phase is feasible for the index, which could see some support develop before a confirmed trend reversal. READ MORE

Nifty Realty: With a Golden Cross of 50 DMA, 100 DMA with the 200 DMA, the index has gained ground consistently. The price formation further indicates “Higher top, higher bottom”, a scenario that is well positioned above all the major moving averages. Any correction should see buying happening in the range of 275 – 270 levels, with a strong support at 260 levels. A ‘channel pattern’ shows 300 to be the immediate level that index may hit. READ MORE