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The Indian benchmark indices, the Sensex and Nifty 50, managed to move further up and hold higher for the second consecutive week. This has given further relief for the market. In the US, the Dow Jones Industrial Average has also risen last week.
Both the Sensex and Nifty were up over a per cent each. Among the sectors, barring the BSE Power (down 0.33 per cent) others closed in green. The BSE Realty and the BSE Capital Goods index outperformed by surging 4.29 and 3.19 per cent respectively.
Broadly, the global equity market is coming closer to a crucial point. Key resistances are ahead for them. Whether they manage to surpass this hurdle or not is going to be very important, going forward. That would set the tone for the coming weeks. As such the price action over the next couple of weeks is going to be crucial and will need a close watch.
FPIs buy
The Foreign Portfolio Investors (FPIs) continue to buy Indian equities. The Indian equity segment saw an inflow of $455 million last week. As mentioned last week, there are good signs that the FPIs have been buying the dips. This is a good indication of bullishness going forward. So as the inflows continue, the Sensex and Nifty 50 can move further higher from current levels.
Nifty 50 (17,599.15)
The rise to 17,650 almost happened last week. The Nifty 50 made a high of 17,638.70 and has come-off slightly from there. The index has closed the week at 17,599.15, up 1.38 per cent.
The week ahead: The near-term outlook is positive. There is room for the Nifty to rise further from here. Immediate support is at 17,500 – the 200-Day Moving Average (DMA). If Nifty manages to sustain above this support, it can see a sustained break above 17,600. Such a break can take it up to 17,740 and even 17,850 this week.
On the other hand, a fall below 17,500 can trigger a corrective dip to 17,250-17,200. The level of 17,200-17,100 is a very strong short-term support. We expect Nifty to sustain above it going forward. The short-term outlook will turn negative only if Nifty falls below 17,100.
Graph Source: MetaStock
Medium-term outlook: Crucial support is at 17,100-17,000. Resistance is at 18,000-18,200. Nifty has to sustain above 17,000 to keep the chances high to break the 18,000-18,200 resistance zone. Such a break will bring back the bullishness. In that case, Nifty can target 19,000 initially and then 20,000, and higher levels eventually over the long term.
Nifty will come under pressure only if it falls below 17,000. In that case, a revisit of 16,800-16,700 levels can be seen. Such a fall will keep the danger alive of seeing 16,500-16,300 on the downside.
Our bias is positive. We expect the Nifty to sustain above 17,000 and breach 18,000-18,200 in the coming weeks.
Sensex (59,832.97)
The break above 59,000 happened and the Sensex has risen well to test almost 60,000 last week. The index made a high of 59,950.06 before closing the week at 59,832.97, up 1.43 per cent.
The week ahead: There is room to rise more from here. Support is at 59,000. Sensex can test 60,300 initially. A break above it can take it further up to 60,450 and even 60,600 this week. The price action thereafter will need a close watch to see if the upmove is extending or not. A pull-back from any of the levels mentioned above can drag the Sensex down to 59,000 again. A sustained rise above 60,600 is needed to see 61,000-61,300 on the upside.
Graph Source: MetaStock
Medium-term outlook: The rise and a decisive close above 59,000 is strengthening the bullish bias. Strong support is at 58,000 and 57,000. Important resistance to watch will be the 61,200-61,400 region. A strong rise above 60,600 will increase the chances of the Sensex breaching 61,400. Such a break will see the Sensex targeting 64,000 and 66,000 over the long term.
Nifty Bank (41,041)
The Nifty Bank index sustained well above 40,000 last week. The index rose to a high of 41,274.70 on Thursday and has come-off slightly from there. It has closed at 41,041, up 1.06 per cent for the week. The index has risen over 4 per cent over the last couple of weeks.
Graph Source: MetaStock
Supports are at 40,800 and 40,400. As long as the index stays above these supports, the near-term outlook is bullish. Immediate resistance is at 41,200. A break above it can take the Nifty Bank index up to 41,620 and 41,740 – the next important hurdles. From a big picture perspective, a decisive break above 41,740 and a subsequent rise past 42,000 will boost the bullish momentum. That will strengthen the case for a trend reversal. In that case, the Nifty Bank index can rally to 42,700-43,000 initially. It will keep the doors open to test 44,000 and higher levels over the medium term.
Dow Jones (33,485.29)
The Dow Jones Industrial Average rose breaking above the resistance at 33,400 initially last week. It made a high of 33,634.74 on Tuesday and has dipped slightly from there. The near-term outlook is still positive.
Graph Source: MetaStock
Support is at 33,200-33,150. As long as the index stays above 33,150, a rise to 34,000 is possible this week. If the Dow Jones manages to breach 34,000, an extended rise to 34,300 and even 34,500 can be seen.
On the other hand, failure to breach 34,000 and a reversal from there could be negative. In that case, a fall to 33,300-33,200 is possible. A subsequent fall below 33,000 will then turn the short-term outlook negative to see 32,500 and lower levels, going forward. As such the price action around 34,000 will need a close watch.
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