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Nifty 50 and Sensex surged to new highs last week. Both the indices rose over 2 per cent each and has closed the week on a strong note. We had expected a corrective fall in the Nifty from the 19,000-19,100 region. A strong follow-through rise from here in the coming week will prove that view wrong. In turn, Nifty can surge to further new highs before a correction begins.
Nifty Bank index has also surged well and closed above 44,000 last week. This has negated the bearish view of seeing a fall to 42,300-42,000 mentioned last week.
Overall, the sentiment is positive. A strong follow-through rise from here can take the Sensex, Nifty 50 and the Nifty Bank indices further higher from here.
All the sectoral indices have closed in green last week. The BSE Auto index outperformed by surging 3.82 per cent. This was followed by the BSE Healthcare and the BSE IT indices. They were up 3.65 and 3.54 per cent respectively.
Strong inflows
The foreign portfolio investors (FPIs) continue to pour money into India. The equity segment saw an inflow of $2.01 billion last week. For the month of June, the FPI has pumped in about $5.73 billion into the Indian equity segment. Strong foreign money flows into equities will continue to aid the Sensex and Nifty 50 scale new highs.
Nifty 50 (19,189.05)
The support at 18,650 mentioned last week held very well. Nifty rose sharply after making a low of 18,646.70 on Monday. The index surged to a new high of 19,201.70 on Friday and closed at 19,189.05, up 2.8 per cent for the week.
Short-term outlook: The break and strong close above 19,000 is very significant. It is now important to see if the Nifty is sustaining this break or not.
Immediate resistance is at 19,260. A break and a strong follow-through rise above it can take the Nifty up to 19,500-19,700 in the short-term.
Important supports are in the 19,050-19,000 region and then at 18,850-18,750 region. Nifty has to break 19,000 and then fall below 18,750 to turn the outlook bearish. That look unlikely in the absence of any new negative trigger.
Chart Source: MetaStock
Medium-term outlook: The expected corrective fall from the 19,000-19,100 region will not happen if the Nifty sustains above 19,000. However, there can be a short-lived corrective from the 19,600-19,700 region. But that will be limited to 19,100-19,000.
The broader picture remains bullish. Nifty can rally to 20,000-20,200 in the coming months. The region around 20,200 is a strong long-term trend resistance. As such the rally can halt around 20,200 and a reversal is possible thereafter.
Sensex (64,718.56)
The 62,850-62,800 support zone held very well last week and the rise to 64,300 has happened in line with our expectation. Indeed, Sensex surged well above 64,300 to make a new high of 64,768.58 on Friday. The index has closed the week at 64,718.56, up 2.76 per cent.
Short-term view: The break and strong close above 64,300 is a positive. Support will now be in the 64,300-64,000 region. Sensex can rise to 66,350 in a week or two. The price action thereafter will need a close watch.
Sensex will come under pressure only if it falls below 64,000. In that case, the index can decline to 63,000-62,800 in the short term. But that looks less likely at the moment.
Chart Source: MetaStock
Medium-term view: The medium-term outlook is bullish. As long as the Sensex sustains above 63,000, the chances are high for it to break 66,350. Such a break can take the Sensex up to 67,500-68,000 in the coming months. Thereafter, a sharp correction is possible.
Nifty Bank (44,747.35)
The bearish outlook of seeing fall to 42,300-42,000 has gone wrong. After struggling to breach 44,000 for more than a month, Nifty Bank index surged to close on a strong note above the 44,000 mark. The index has closed at 44,747.35, up 2.6 per cent for the week.
Short-term view: The outlook is bullish. Support is now at 44,300 and 44,000. The Nifty Bank index can rise to 45,500-45,700 in the short term.
This 45,500-45,700 is a strong resistance zone. So, the price action here will need a close watch to see if a reversal is happening or not.
The short-term view will turn negative only if the index declines below 44,000 again. In that case, a fall to 43,000 and lower can be seen.
Chart Source: MetaStock
Medium-term view: Strong clusters of supports are seen in the broad 43,000-42,000 region. So, as long as the index sustains above 42,000, the outlook is bullish. Nifty Bank index has potential to target 48,400-49,500 over the next couple of quarters.
The bullish outlook will get negated only if the index declines below 42,000.
Dow Jones (34,407.60)
The support at 33,650 itself has held very well. The Dow Jones Industrial Average made a low of 33,610.32 on Monday and then rose sharply above 34,000 last week. The index has closed at 34,407.60, up 2.02 per cent for the week.
Chart Source: MetaStock
The outlook is bullish. Immediate support is at 34,200. Below that, 33,900 is the next strong support. Resistance is at 34,500. A strong break above it can take the Dow Jones up to 34,800 and 35,000 initially. A further break above 35,000 will then open the doors for the index to target 35,500 in the coming weeks.
The level of 33,500 is a crucial support. The outlook will turn bearish only if the Dow Jones falls below 33,500.
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