Should you buy stocks on a dip? Here's what technical indicators suggest

The rising death toll, slow roll-out of vaccination, and Covid-19 spreading to rural areas may keep the upside in contained in the markets, believe analysts

After two straight sessions of gains, Indian equities turned wobbly on Wednesday amid subdued global cues and as investors decided to take profits off the table on the back of a 3 per cent rally so far this week. That said, even as the benchmark indices slipped around 0.3 per cent in the intra-day deals, both, the Sensex and the Nifty were holding their crucial psychological levels of 50,000 and 15,000, respectively.

The BSE barometer Sensex ended at 50,193 on Tuesday, topping the 50,000-mark for the first time since April 1 on closing basis. The Nifty, on the other hand, closed at 15,108, settling above 15,000 for the first time since March 12. The rally is driven by hopes that the drop in daily Covid cases meant the worst of the second wave was behind us. Beides, the prospect of the economy normalising in the next few weeks should enthuse investors, analysts believe.

"We believe investors will continue to take comfort from receding fresh daily cases. This indicates that the assumption of the second Covid-19 wave daily caseload peaking by the end of May or mid of June holds, and the adverse impact of the second wave should not be felt beyond Q1FY22," Binod Modi, head of strategy at Reliance Securities, said.

However, the rising death toll, slow roll-out of vaccination, and Covid spreading to rural areas may keep the upside in contained.

Against this backdrop, here's where the key indices are headed:

S&P BSE SENSEX

Likely target: 51,300 - 51,500

Upside potential: 1.68% - 2.68%

The index has managed to sustain above the 50-days moving average (DMA), currently placed at 49,581 levels, and is showing a positive momentum. Going forward, a move above the 50,450-mark may trigger a sharp rally towards 51,300 to 51,500 levels. The overall trend looks optimistic with the Relative Strength Index (RSI) conquering the resistance of 58 value. This suggests strength in the upward bias, as per the daily chart.CLICK HERE FOR THE CHART
 
NIFTY50

Likely target: 15,300 to 15,500

Upside potential: 1.19% - 2.51%

After staying in a consolidation phase for about three months, the index has decisively conquered the selling pressure around 15,000 levels. This move has opened doors for a breakout towards 15,300 to 15,500 levels. The Moving Average Convergence Divergence (MACD) has conquered the zero line upward reflecting an upward direction in the forthcoming sessions, as per the daily chart. Till the index defends the support of 14,800 aggressively, the uptrend is expected to see an added interest from market participants. CLICK HERE FOR THE CHART
 
NIFTYBANK

Likely target: 35,000

Upside potential: 3.86%

The index has crossed the 50-days moving average (DMA) firmly and is showing an upside bias towards 35,000 levels. This move is supported by MACD, which has crossed the zero line upward. The overall medium-term trend has a support of 32,000 levels. Till this support is defended, the upward bias shall remained intact. CLICK HERE FOR THE CHART
 
NIFTY AUTO

Likely target: 10,600 - 10,800

Upside potential: 3.52% - 5.47%

After crossing the significant resistance of 10,000 levels, the index is geared up to climb higher levels in the upcoming sessions. The positive breakout may see a rally towards 10,600 to 10,800 levels. The MACD has also crossed the zero line upward, highlighting the positive sentiment. The underneath trend is expected to favour long positions. CLICK HERE FOR THE CHART
 
NIFTY IT

Outlook: Consolidation phase (25,550 to 25,300)

The index is currently consolidating and has been trading in a range of 25,550 to 25,300 for the last 22 sessions. Only a breakout from this range would determine the next course of price action. One can expect a rally of 500-600 points after a clear breakout, as per the daily chart. CLICK HERE FOR THE CHART
 
NIFTY METAL

Likely target: 5,500 to 5,700

Upside potential: 3.97% - 7.75%

With a "Higher High, Higher Low" formation, the index is in a firm grip of bullish sentiment. Every weakness has witnessed accumulation and aggressive buying momentum. Going forward, as long as the support of 5000 is defended, the index may see a rally towards 5,500 to 5,700 levels, as per the weekly chart. The RSI, too, has firmly defended the selling pressure in the overbought category of RSI suggesting further upside. CLICK HERE FOR THE CHART