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Yoganand D.

The word ‘decoupling’ is becoming alien to the Indian markets as the markets in India and rest of the world are increasingly tracking the US markets.

It is becoming a daily ritual for most investors to wake up in the morning and scan the internet to know how the US markets closed the previous day.

With Sensex critically poised above its long-term up-trend line at 15,690, it becomes imperative at this juncture to know the outlook for the major indices in the US.

The global benchmark Dow Jones Industrial Average (DJIA) closed at 12,040 on Thursday, just above a significant support level of 12,000. We see that DJIA is trading well below its 200-day moving average. The relative strength index in the daily chart has just entered the bearish zone, implying further downside. If the index breaks the support at 12000, it is likely to head towards the January low of 11,634. On the other hand, if DJIA index bounces off 12000, it can encounter resistance at 12,756.

The S&P 500 Index closed at 1304 on Thursday. It is also hovering above 1300, which is a key support and a psychological level. The daily relative strength index of S&P 500 has also entered the bearish zone. If S&P 500 Index breaks the support at 1300, it is likely to fall to 1220. In case of an upward reversal, it can find resistance at 1,380.

Nasdaq Composite closed at 2,220 on Thursday, hovering above a significant support level of 2,200. This support level coincides with the low formed in January. We note that the index is trading well below the 200-day moving average. The daily relative strength index is featuring in the bearish zone. If the index conclusively breaks through the current support, it is likely to decline further to find support at around 2020.

The fact that all three major indices in the US are poised above key support levels makes the next two trading sessions very important in determining the direction of the markets in US, India and the rest of the world.

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