Index Outlook: Don’t expect too much action

After a lacklustre start, the broader indices revved up and closed on a positive note, taking cues from strong global markets. The rupee gaining to 66.61 also provided some cushion to the market. Last week, foreign portfolio investors (FPIs) continued to be net buyers in equities. The surge in oil prices and the fall in the US dollar index also aided the market. The US Fed holding rates and maintaining an accommodative monetary policy in the recent meeting, kept the bullishness intact in the global and domestic markets.

Nifty 50 (7,604.3) After a slow start, the Nifty declined to an intra-week low at 7,405 before closing up by 94 points or 1.25 per cent, for the week. The index continues to move sideways in a narrow range between 7,400 and 7,600.

The week ahead: Testing the key resistance at 7,500, the index managed to move higher at the tail-end of the prior week.

That the index stayed above the support level of 7,400 and 50-day moving average last week is positive from a short-term perspective. However, the index currently tests a significant resistance at 7,600 levels and we can’t rule out a decline to test the support at 7,400 if it fails to break through decisively.

An upbeat start can push the index higher to next target of 7,675. The next key resistance is at 7,730. As the market is closed on Thursday and Friday on account of Holi and Good Friday respectively, traders with a short-term perspective should tread with caution and can consider taking profits in the truncated week.

A fall below the immediate support at 7,500 can drag the index down to 7,400 and then to 7,350 levels, which can cushion the index. Subsequent supports are at 7,300 and 7,250. As long as the index trades above 7,100, the ongoing short-term uptrend will remain in place and investors can remain invested. Nevertheless, a decisive fall below 7,100 will change the trend and pull the index lower to the next base levels at 7,000 and 6,870.

Medium-term trend: That the index continued to trade above 7,400 last week is a bullish sign. Continuation of the uptrend can take the index northwards to the key medium-term resistance at 7,750.

Inability to move beyond this hurdle can keep the index choppy. But a conclusive break through of 7,775 can push the index to 8,000 and 8,270 in the medium term.

Sensex (24,952.7) The Sensex too advanced following a slippery start. It marked an intra-week low at 24,354.5 on Wednesday and moved upwards. The index advanced 234 points or 1 per cent last week.

The week ahead: The index stayed above the key support at 24,000 is a positive. However, the index now faces another crucial resistance at 25,000 which we had mentioned in this column last week.

Strong break-through of the resistance will be positive and can pull fresh buyers in to the equity market. Thus, the Sensex can extend its rally to 25,500. But failure to decisively move above 25,000 can restrict the index in the sideways range between 22,500 and 25,500. Targets on a conclusive breach of 25,500 are 26,300 and 27,200. Key support below 24,000 is at 23,000.

Bank Nifty (15,654.8) Last week, the Bank Nifty witnessed a strong rally gaining 486 points or 3.2 per cent. Since registering a 52-week low at 13,407 in late February, the index has been on a short-term up move. It has breached its 21 and 50-day moving averages and hovers well above them.

After a sideways movement, it managed to surpass the resistance at 15,500 on Friday. Though this move is encouraging, the index has another significant resistance ahead at 16,000. Traders with a short-term view can continue to hold their long position and consider exiting near this resistance level. Next barrier is at 16,250.

Conversely, a slump below the immediate support at 15,500 can drag the index down to 15,500 and 14,765 levels. If this fall happens, it will be a corrective decline and traders with high risk appetite can hold their long position with a stop-loss at second support. Strong tumble below 14,765 will alter the bullishness and pull the Bank Nifty down to 14,500 and then to 14,000 in the short term.

Global cues Dow climbed 389 points or 2.3 per cent last week to close at 17,602. Nasdaq and S&P 500 also closed on a strong note, whereas European indices closed on a mixed note. The index has been on a short-term uptrend since the February low at 15,503.

Nevertheless, the index tests a significant resistance in the zone between 17,600 and 17,700. Only a decisive move above this zone can push the index higher to 17,900 or 18,000 in the short term. Key supports to note are at 17,200 and 17,000.

Among the Asian indices, Hang Seng gained 2.3 per cent and Shanghai jumped 5.2 per cent. But Nikkei fell by 1.3 per cent in the previous week.

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