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After witnessing some wild swings, the benchmark indices, Sensex and Nifty 50, have closed the calendar year 2022 on a positive note. Indeed, the domestic benchmark indices have outperformed their major global peers. Sensex and Nifty have closed the year up 4.44 and 4.33 per cent respectively. Nifty has closed the year at 18,105.30 and Sensex at 60,840.74.
On the global front, the Dow Jones Industrial Average in the US was knocked down 8.78 per cent in 2022. Asia’s Nikkei 225 and Shanghai Composite indices were beaten down badly by 9.37 and 15.13 per cent.
Many sectoral indices have risen much higher than the benchmark indices. Among them, the BSE Power index had surged the most - 25.84 per cent. The BSE Bankex and BSE PSU indices were up over 20 per cent each. The BSE IT index, down 24.24 per cent, was the worst performer.
Volatility is expected to remain high in 2023. Increasing fear of the new Covid variant spreading, global economic slowdown, more rate hikes from the US Federal Reserve etc can keep the market vulnerable and the sentiment weak. Against this backdrop, we take a deep dive to see what the charts have in store for the indices in 2023.
Outlook 2023
Nifty 50 (18,105.30)
Nifty made a new high of 18,887.60 in December and has come off sharply towards the end of the year. The overall trend is up, and the outlook is bullish. So, the broader strategy will be to buy on dips in 2023.
Immediate support is at 17,775. Below that 17,600 and 17,400 are the next important supports. We expect the downside to be limited to 17,400. The fall to 17,600-17,400 if seen will be a very good buying opportunity from a long-term perspective.
Graph Source: MetaStock
A strong trigger will be needed to break below 17,400, in which case a steeper fall to 17,000 can be seen. But we place very less probability for that fall to happen.
Short-term resistance is at 18,950. A break above it will open doors for a fresh rally towards 19,700-19,900 — the first important resistance zone. Above this, 20,200-20,400 will be the next significant hurdle.
We expect this first leg of rally to halt anywhere in the broad 19,700-20,400 region. But whether this rally is will happen from here itself or after a fall to 17,600-17,400 has to be seen. Thereafter, a corrective fall to 18,500 or even 18,000 is a possibility.
Then the second leg of rally can begin from around 18,500-18,000. That will then have the potential to take the Nifty above 20,400 and target 21,000 and even higher levels towards the end of the year or in the first quarter of 2024.
Sensex (60,840.74)
Graph Source: MetaStock
Sensex made a new high of 63,583.07 in 2022 and has come off from there. Near-term supports are at 60,785 and 60,000. Below that strong supports are at 58,875 and 58,635 that can limit the downside in 2023.
Intermediate resistance is around 65,000. Above that, a series of resistances are poised in between 66,000 and 67,000. Sensex can top out anywhere in the 66,000-67,000 region first and then see a corrective fall to 65,000-64,000. Thereafter, a fresh leg of rally will take the Sensex beyond 67,000 targeting 69,000 by the end of 2023 or in the first quarter of 2024.
This bullish outlook will get negated if Sensex makes a decisive close below 58,000. In that case, a steeper fall to 57,500-57,300 and even lower levels is possible.
Nifty Bank (42,986.45)
Nifty Bank index has outperformed the benchmark indices. It has surged over 21 per cent for the year and closed on a strong note.
Graph Source: MetaStock
Short-term supports are in the 41,500-41,000 region. Below that 39,600-39,500 and 37,850-37,700 are much lower support. But as seen from the charts, the chances are high for the Nifty Bank index to sustain above 41,000.
Immediate resistance is at 43,350 and then 44,000 will be the crucial short-term support. If the Nifty Bank index struggles to breach 44,000 immediately, then there could be a sideways consolidation between 41,000 and 44,000 in the first quarter of 2023. In that case, a test of 39,500-39,000 is also possible.
However, the overall trend will continue to remain up. As such, an eventual break above 44,000 will take the Nifty Bank index up to 46,500-48,000 initially. Thereafter, a corrective fall to 45,000-44,000 is a possibility. A fresh leg of rally will then have the potential to take the Nifty Bank index above 48,000 targeting 50,000 either by the year-end itself or in early 2024.
Dow Jones (33,147.25)
The Dow Jones Industrial Average got beaten down badly in the first three quarters last year. However, it had managed to bounce back sharply in the final quarter recovering some of the loss. The index has closed the year down by 8.78 per cent.
Graph Source: MetaStock
The outlook is mixed. Strong resistance is in the 34,450-35,550 region. A strong rise past 35,550 is needed to boost the bullish momentum and take the index up to 38,000-38,300. Thereafter an eventual break above 38,300 will pave way for the next target of 40,000. However, as seen from the charts, testing 40,000 in 2023 itself could be less probable though not completely ruled out.
Support is in the 32,500-32,000 region. A break below 32,000 can drag it down to 31,000-30,000. In that case, there could be chances of seeing a broad sideways consolidation between 30,000 and 35,550 or even 28,500 and 35,550. For now, it is a wait-and-watch situation.
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