Nifty 50 and Sensex are continuing their struggle to rise. Although the indices managed to inch higher in the first half of the week, they failed to get a strong follow-through rise. Both the indices fell sharply towards the end of the week giving back all the gains made during the week. Sensex and Nifty have been coming down over the last five weeks. However, as mentioned last week, the pace of fall has been slow. Thus, the recent fall is just a correction within the overall uptrend. Supports are coming up and the indices are likely to resume their overall uptrend going forward.
Among the sectors, barring a few, all indices have managed close in green last week. The BSE Capital Goods index rose the most by 1.9 per cent last week. This was followed by the BSE Power index, up 1.53 per cent. The BSE Auto, Oil & Gas and Healthcare indices were down 0.6 per cent each.
The foreign money is continuing to flow into the Indian equities, though at a slow pace. The foreign portfolio investors (FPIs) bought about $278 million in the equity segment last week. So far, the FPIs have pumped in about $1.29 billion for the month of August. We repeat that the FPIs are continuing to buy the dips, and this is very positive from the long-term perspective.
Nifty 50 (19,265.80)
The 21-Day Moving Average resistance, currently at 19,498, had capped the upside last week. Nifty rose to a high of 19,584.45 on Thursday, but failed to sustain higher. It fell sharply from there giving back all the gains and close the week at 19,265.80, down 0.23 per cent.
Short-term view: The short-term trend is down. However, as mentioned last week, strong supports are there in the 19,100-19,000 region. We expect the current fall to halt anywhere in this support zone and see a bullish reversal.
A strong bounce from the 19,100-19,000 region can take the Nifty up to 19,300-19,350 initially. A further break above 19,350 will then seen an extended rise to 19,450-19,500.
In case the Nifty breaks below 19,000, though less likely, it can fall to 18,900 or 18,800-18,750.
Medium-term view: The broader trend is still up. We reiterate that the recent fall is just a correction within the broader uptrend. The 19,100-18,900 region is a strong support which can limit the downside. We expect the index see a fresh leg of upmove from this support zone. Nifty can revisit 20,000 levels in the coming months and target 20,200 on the upside.
The uptrend will come under threat only if the Nifty declines below 18,900. But as mentioned last week, a strong negative trigger is needed for that to happen.
Sensex rose to a high of 65,913.77, but fell sharply from there towards the end of the week. The index gave back all the gain and had closed at 64,886.51, down 0.1 per cent for the week.
Short-term view: The short-term trend is down. But there is not much room left to fall further. Strong support is around 64,500 and 64,350. We expect these supports to hold and the Sensex can rise back to 66,000-66,300 in the coming weeks. A break above 66,300 can see an extended rise to 66,800 and 67,000.
If Sensex breaks below 64,350, it can fall to 64,000 or 63,800. But that looks less probable.
Medium-term view: The overall trend is still up. The recent fall is just a correction within it. Strong support is in the 64,000-63,800 region which can halt the current fall. A fresh leg of upmove from there can take the Sensex up to 67,800-68,000 over the medium term.
The bullish view will come under threat only if Sensex breaks below 63,800. Such a break, though less likely, can drag the index down to 62,200-62,000.
Nifty Bank (44,231.45)
Nifty Bank index snapped the four-week fall. The index rose to a high of 44,949.90 and fell from there giving back some of the gain. It has closed the week at 44,231.45, up 0.87 per cent.
Short-term view: The outlook is slightly mixed. The 100-Day Moving Average support around 43,930 is continuing to give support and limiting the downside. Another support is at 43,650. But at the same time, the Nifty Bank index is not getting a strong follow-through buying to take it decisively above 45,000.
Broadly, 43,650-45,000 can be the short-term trading range. A breakout on either side will determine the next move. A break above 45,000 will bring back the bullish momentum. Such a break can take it up to 46,000-46,500 in the short term. On the other hand, a break below 43,650 can drag it down to 43,000 and lower.
Medium-term view: The big picture is positive. Strong support is in the 43,000-42,500 region. As long as the index stays above this support zone, the bullish outlook will remain intact. Nifty Bank index can target 48,650 in the coming months.
Dow Jones (34,346.90)
The support in the 34,200-33,900 mentioned last week is holding very well in line with our expectation. The Dow Jones Industrial Average made a low of 34,029.22 and has risen back from there. The index has closed at 34,346.90, down 0.45 per cent for the week.
Outlook: Strong support is now in the 34,000-33,800 region. The index is likely to sustain above this support zone. A break below 33,800 is less likely. As such the index can rise either from current levels itself or after a test of 33,800 on the downside. That rise will take the Dow Jones up to 35,000 in the short-term.
It will also keep the broader uptrend intact for the Dow Jones to target 36,000-36,500 over the medium-term.