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Nifty 50 and Sensex witnessed a strong rise last week. The benchmark indices have risen about 1.9 per cent each last week. The Nifty Bank index has also risen breaking above the key 45,000-mark last week. As we have been mentioning over the last couple of weeks, the corrective fall in the benchmark indices have come to an end and a new leg of rise has begun. So, the broader uptrend is intact and more rise is on the cards, going forward.
All the sectoral indices have closed in green. The BSE PSU index had surged the most. The index was up 5.52 per cent last week. The BSE Power, Capital Goods and Realty indices were up over 4 per cent each.
FPIs sell
The foreign portfolio investors sold the Indian equities last week. The equity segment witnessed a net outflow of about $499 million. It is to be noted that the FPIs were buying the Indian equities all through this corrective fall. The FPI action in the coming weeks will need a very close watch. They will have to start buying again in order to push the benchmark indices to new highs. Else the new leg of upmove that had begun just now will be very shallow. We will have to wait and watch.
Nifty 50 (19,819.95)
The break above 19,500 and the rise to 19,850 has happened in line with our expectation. Nifty made a high of 19,867.15 on Friday and has come down from there slightly. It has closed the week at 19,819.95, up 1.98 per cent.
Short-term view: The outlook is bullish. Immediate support is at 19,680. Below that, the 19,500-19,400 region a very strong short-term support. The price action on the daily chart indicates that the Nifty has got strong buying in this 19,500-19,400 support zone.
A rise to revisit 20,000 levels is possible this week. Nifty can target 20,200 initially and then an extended rise up to 20,400 is also possible. The price action, thereafter, will need a close watch. Failure to rise past 20,400 can trigger a corrective fall.
The short-term view will turn negative if the Nifty declines below 19,400. In that case, a test of 19,200 and even 19,000 is possible. But, a fall below 19,400 looks unlikely at the moment.
Chart Source: MetaStock
Medium-term outlook: The bullish view of seeing a rise to 20,200-20,400 remains intact. However, this 20,200-20,400 region is a very strong long-term resistance zone. So, the price action, thereafter, will need a very close watch.
A strong break above 20,400, will be very bullish. Such a break will see the Nifty surging towards 21,500 in the coming months.
On the other hand, failure to rise past 20,400 can drag the Nifty below 20,000 again. In that case, a range of 19,000-20,400 can be seen for some more time.
The region between 19,200 and 19,000 is an important support zone. The outlook will turn bearish only if the Nifty declines below 19,000.
Sensex (66,598.91)
As expected, Sensex has risen breaking above 66,000. The index made a high of 66,766.92 and has come down slightly from there. It has closed the week at 66,598.91, up 1.85 per cent.
Short-term view: Outlook is bullish. Cluster of supports are there in the broad 66,000-65,500 region. The chances are high for the index to sustain above 66,000 this week. Sensex can rise to 67,000-67,500 in the near term. A break above 67,500 will see an extended rise up to 68,000.
The short-term outlook will turn negative if a fall below 65,500 is seen. In that case, a test of 64,500 can be seen in the short term.
Chart Source: MetaStock
Medium-term outlook: The current leg of rally can find resistance in the 68,000-68,500 region. The price action, thereafter, will need a very close watch. A strong sustained break above 68,500 will pave way for a rally to 70,000.
But a reversal from around 68,500 can take the index down to 66,000 again. In that case, Sensex can oscillate in a range of 64,500-68,500 for some more time.
The broader picture will turn negative only on a strong fall below 64,500.
Nifty Bank (45,156.40)
The struggle to breach 45,000 has come to an end. The Nifty Bank index has risen and closed well above the 45,000 mark last week. The index has closed at 45,156.40, up 1.62 per cent.
Short-term view: The outlook is bullish. The region between 45,000 and 44,750 will now act as a strong support and limit the downside. Nifty Bank index can rise to 46,000-46,200 this week. A break above 46,200 can take the index further up to 47,000.
The region between 44,200 and 44,000 is a very strong support zone. The short-term outlook will turn negative only if the index declines below 44,000. If that happens, a test 43,600-43,500 can be seen. But such a fall looks unlikely. We expect the Nifty Bank index to sustain above 45,000, going forward.
Chart Source: MetaStock
Medium-term outlook: The outlook is bullish. The price action since August indicates an inverted head-and-shoulder pattern formation. This strengthens the bullish case. Nifty Bank index has potential to target 48,000 and 48,650 in the coming months. A strong break above 46,000 will clear the path for this rally.
Strong support is in the 43,500-43,000 region. The outlook will turn bearish only if the Nifty Bank index declines below 43,000. But that looks unlikely at the moment.
Dow Jones (34,576.59)
The Dow Jones Industrial Average fell breaking below the support at 34,400. However, that break was short-lived. The index has risen back from the low of 34,291.56, recovering some of the loss towards the end of the week. It has closed at 34,576.59, down 0.75 per cent.
Chart Source: MetaStock
Outlook: The immediate outlook is unclear. Resistance is around 34,700. A break above it can take the Dow Jones up to 35,000-35,200 this week. Failure to breach 34,700 can take the index down to 34,200 and lower.
Broadly, we expect the Dow Jones to be in a range of 34,200-35,200 for some time. A breakout on either side of this range will determine the next move. The bias is positive. So, the preference will be to see the Dow Jones break above 35,200 and rise to 36,000 eventually in the coming weeks.
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