Technical Analysis

Index Outlook | Nifty 50 paused around 15,000

Yoganand D BL Research Bureau | Updated on February 13, 2021

Both Sensex and Nifty 50 are range-bound and await further market direction; stay alert

Last week, the domestic benchmark indices — the Sensex and the Nifty 50 — broadly moved in a narrow range after a strong post-Budget rally.

The indices could remain choppy this week as well and global cues could lend direction. Rupee movement and global crude oil price action needs a close watch along with the global indices.

 

Nifty 50 (15,163.3)

After gaining 1.28 per cent on Monday, the Nifty 50 slightly moved above the key psychological resistance level of 15,000 and thereafter stayed on a sideways path, hovering above this level. Amid volatility, the index climbed 239 points, or 1.6 per cent, last week.

It registered a new high at 15,257 levels. However, the level of 15,000 continues to act as a key hurdle for the index in the near term; this hurdle needs to be conclusively breach for the sustainability of the uptrend.

The week ahead: The short-term uptrend that commenced from the support in the 13,500-13,600 band is currently under pause as the index moves sideways. It could continue to hover at the 15,000 mark for a while before taking a clear short-term direction either on the upside or on the downside.

A strong rally above the immediate resistance level of 15,250 can push it higher to the next barrier at 15,500 in the short term. That said, if the index slips below 15,000, it can waver in the between 14,650 and 15,250 for a while.

The daily relative strength index (RSI) is featuring in the bullish zone, but is on a pause; the weekly RSI hovers in the bullish zone with absence of strong strength. The daily as well as the weekly price rate of change indicators hover in the positive terrain. But the they are slopping down, which is an initial sign of weakness that calls for caution.

A slump below the key base level of 14,500 can drag the index lower to 14,280 and then to 14,000 levels. Significant supports below 14,000 are placed at 13,600 and 13,200 levels.

Medium-term outlook: The intermediate-term uptrend that has been in place from last March is intact. As long as the index hovers above the vital base level of 12,750, the medium-term uptrend that began from the September 2020 low of 10,790 levels will remain intact.

This uptrend will be under threat if the index falls below 12,750 and further gets pulled down to 12,400, 12,260 and 12,000 levels. If the index witnesses a corrective decline from the present levels, the significant support at 14,000 can provide cushion. The subsequent support is at 13,500.

On the other hand, an emphatic rally beyond the 15,000 mark can underpin the uptrend and take it higher to 15,500 in the medium term.

Sensex (51,544.3)

Last week, the Sensex added 812 points, or 1.6 per cent, in the mist of choppiness. The index continues to tests a resistance at 51,000 and the next near-term resistance is at 52,000. An emphatic break above 52,000 can pave the way for an upmove to 53,000 in the short term.

A decline below 51,000 can experience selling interest and drag the index down to 50,000, which could buttress the corrective fall. That said, if the index slumps below the crucial base level of 50,000, supports at 49,000 and 48,000 levels could come into play.

The recent rally that had begun from around the base level of 46,000 will be under threat on a plunge below 48,000, which can lead to a further fall below 47,000 and then to 46,000 levels. We reaffirm that the medium-term uptrend that started from last the September low of 36,495 will remain in place as long as the index trades above 45,000 levels.

The next supports are placed at 44,520 and 44,000. Investors with a long-term perspective can remain invested with a revised stop-loss at 40,000.

Nifty Bank (36,108.9)

Following a 16.6 per cent jump in the first week of February, the Nifty Bank advanced marginally gaining 454 points, or 1.27 per cent, in the past week. The index was basically range-bound over last week, testing a resistance at 36,000. A clear breakthrough of this level can pave the way for an upmove to 36,600 and then to 37,000 levels in the coming weeks.

The next key levels of 37,500 and 38,000 could act as resistance thereafter. However, any declines below the immediate support levels of 35,500 and 35,000 can pull it lower to 34,000 on the back of selling interest and profit booking.

Subsequent supports are placed at 33,500 and 33,000 for the index.

The medium-term uptrend that has been intact from the September 2020 low of 20,400 levels, will be in place as long as the index trades above the vital level of 29,000. Supports below this level are at 28,500 and 28,000 levels.

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Published on February 13, 2021
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