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Sensex and Nifty 50 have begun the New Year on a negative note. Although the benchmark indices opened the year on a positive note, they failed to gather momentum and see a sustained rise. Both the Sensex and Nifty fell sharply in the second half of the week and were down over a per cent for the week. Although the fall last week is looking strong on the daily chart, the weekly candles indicate that the fall is within a sideways range. Additionally, the Dow Jones Industrial Average in the US has seen a strong rise and a decisive close above 33,500 on Friday. This can give a breather for the Indian benchmark indices on Monday. As such, the chances of seeing a bounce-back move in the coming week cannot be ruled out.
Among the sectors, the BSE IT index was beaten down badly and was down 2.3 per cent last week. This was followed by the BSE Bankex index, down 1.75 per cent.
FPIs sell
The Foreign Portfolio Investors (FPIs) were net sellers of the Indian equities last week. They sold $708.7 million in the equity segment. If the FPIs continue to sell, then the Sensex and Nifty can remain under pressure and fall more. In December, the Indian equity segment had seen a net inflow of $1.35 billion.
Nifty 50 (17,859.45)
Nifty began the week on a positive note and rose above 18,200 initially. However, it failed to get a strong follow-through buying. Nifty fell sharply from the high of 18,251.95 and closed the week at 17,859.45, down 1.36 per cent.
The week ahead: The fall last week on the daily chart looks strong. However, on the weekly chart, the candles indicate a range of 17,775-18,265. There is also an important trendline support at 17,750. So, as long as the Nifty sustains above 17,750, a bounce back above 18,000 and a rise to 18,200-18,300 is possible in the near term.
Nifty will come under pressure only if it makes a decisive daily close below 17,750. Such a break can drag it to 17,500-17,450 and even 17,400. Thereafter, a fresh bounce to 17,700-17,800 can be seen.
Chart Source: MetaStock
Medium-term outlook: The region between 17,450 and 17,400 is a strong trend support. A break below it will be difficult. As long as the Nifty sustains above 17,400, the overall trend will remain up.
Important resistance is at 18,385. A strong break above it will see the Nifty rising towards 19,000 again. It will also keep the bigger picture bullish to see 19,500-20,500 on the upside in the coming months.
If Nifty breaks below 17,400, an extended fall to 17,200-17,000 can be seen.
Sensex (59,900.37)
Sensex failed to sustain the break above 61,000 witnessed initially last week. The index made a high of 61,343.96 and has declined sharply to close just below the psychological 60,000-mark. Sensex was down 1.55 per cent last week and has closed at 59,900.37.
The week ahead: The immediate outlook is slightly mixed. An important support is at 59,650. Whether the Sensex manages to hold above this support or not will determine the next move.
If Sensex sustains above 59,650 and bounces back above 60,000, the downside pressure can ease. In that case, a rise to 61,000-61,300 can be seen. It will also keep the current 59,650-61,400 range intact.
If Sensex declines breaking below 59,650, it can test 58,900-58,850 and 58,775 on the downside.
Chart Source: MetaStock
Medium-term view: Crucial supports for the Sensex are at 58,850 and 57,500. As long as the index trades above 57,500, the overall trend will remain up and the current move will only be a corrective fall within it.
Key resistance is at 61,500. Sensex has to breach 61,500 to bring back the bullish momentum. Such a break will open doors for a fresh rally targeting 64,500-65,500 on the upside.
Nifty Bank (42,188.80)
Nifty Bank index has been facing strong resistance around 43,500. The index failed to see a sustained break above 43,500 for the third consecutive week. It made a high of 43,578 last week and has come off sharply from there. The index has closed at 42,188.80, down 1.86 per cent.
Chart Source: MetaStock
Broadly, Nifty Bank index has been range bound over the last three weeks. 41,500-43,620 has been the trading range. Strong support is in the 41,100-41,000 region. Key resistance is at 44,000-44,200. So, 41,000-44,000 can be the broad trading range that can be seen for a few weeks.
From a bigger picture perspective, the overall bias is bullish. A break below 41,000 is less likely. As such we can expect the Nifty Bank index to breach 44,000 eventually and rise to 46,000-46,500 over the medium term.
Global cues
The Dow Jones Industrial Average (33,630.61) has broken its 32,500-33,500 range on the upside as expected. On Friday, the index had surged over 2 per cent breaking the range on the upside. It has closed the week 33,630.61, up 1.46 per cent.
Am important resistance is in the 33,800-34,000 region. The Dow Jones has to rise past 34,000 to continue the upside. A strong follow-through rise above 34,000 can take the index up to 34,500 initially. It will also keep outlook bullish to see 35,500 eventually in the coming weeks.
On the other hand, if the Dow Jones fails to break above 34,000, it can fall back to 33,000 and 32,500 again. As such the price action around 34,000 will need a close watch this week.
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