The Indian benchmark indices broadly remained stable last week. Nifty 50, Sensex and the Nifty Bank indices oscillated in a sideways range all through the week and have closed marginally higher. Broadly, the immediate outlook is mixed. As mentioned last week, we will have to wait and watch the price action closely to get a clear cue on the next move.
On the other hand, the Dow Jones Industrial Average in the US has risen well for the fourth consecutive week. It continues to outperform the Indian markets.
The foreign portfolio investors (FPIs) turned net sellers of Indian equities again last week. After buying $869 million in the week earlier, they sold about $127 million last week. The FPIs will have to become strong buyers to strengthen the upmove in the Sensex and Nifty. Until then, the rise the Indian benchmark indices could be shallow.
Nifty 50 (19,794.70)
The resistance at 19,800-19,850 continued to hold well last week as well. Barring Monday, Nifty broke above 19,800 every day but failed to sustain. Indeed, a high of 19,875.15 made on Thursday also could not sustain. Nifty has closed the week at 19,794.70, up 0.32 per cent.
Short-term view: The outlook is mixed. The level of 19,875 will be a very crucial resistance to watch. Nifty has to get a break above 19,875 and a subsequent rise past 19,900 to gain bullish momentum. In that case, a rise to 20,000-20,100 can be seen initially this week. A further break above 20,100 will then open the doors for the Nifty to target 20,300-20,500 eventually in the coming weeks.
Immediate support is at 19,750. A break below it can take the index down to 19,650 and 19,600 this week. The region between 19,600 and 19,500 is a strong support. The short-term outlook will turn bearish only if the Nifty declines below 19,500.
Broadly, 19,650-19,900 or 19,500-20,100 can be the short-term trading range of the Nifty.
Medium-term view: As mentioned last week, 18,800-20,450 will be the wider medium-term trading range for the Nifty. Intermediate resistance and support within this range are at 19,950 and 19,500 respectively. A break above 19,950 can take the Nifty up towards 20,450 - the upper end of the range. Conversely, a break below 19,500 will see the index declining towards 19,000-18,800.
A break below 18,800, if seen, can drag the Nifty down to 18,200-18,000. But from a long-term perspective, such a fall will be a very good buying opportunity.
Nifty Bank (43,769.10)
Nifty Bank index fell in the first half and then managed to recover well in the second half of the week. The index made a low of 43,230.95 on Wednesday and had risen back well from there to close the week at 43,769.10, up 0.42 per cent.
Short-term view: The price action over the last three weeks indicates a range-bound movement. Support is in the 43,100-43,000 range; 44,000-44,500 will be the resistance zone. So broadly, 43,000-44,500 can be the trading range for this week also. Within this, looking at the price action on the daily chart, the bias is inclined towards seeing a rise to 44,000-44,500 this week.
Overall, we will have to wait for a breakout on either side of 43,000-44,500, which will determine the next leg of move. A break below 43,000 can take the Nifty Bank index down to 42,800. On the other hand, a break above 44,500 will target 45,000 on the upside.
Medium-term view: As mentioned last week, as long as the index stays below 44,000, the double-top pattern will stay valid. As such, a break below 42,800 will intensify the selling pressure and drag the index down to 42,000 and even 41,000-40,000 in the coming months.
A decisive break above 44,000 and a subsequent rise past 45,000 will be needed to turn the medium-term outlook bullish. Only in that case, a revisit of 46,000 and higher levels will come into the picture.
Sensex was stuck in between 65,500 and 66,250 last week. The index struggled to get a strong follow-through rise above 66,000 all through last week. It made a high of 66,235.24 on Thursday. It had come down from there to close the week at 65,970.04, up 0.27 per cent.
Short-term view: The outlook is mixed. Support is at 65,700. Resistances are at 66,200, 66,350 and 66,500. So broadly, the Sensex can trade in a range of 65,700-66,500 for some time. A breakout on either side of this range will then determine the next move.
A break above 66,500 can be bullish to see 67,500 on the upside. An eventual break above 67,500 will take the Sensex up to 68,000 in the short term.
On the other hand, a break below 65,500 will increase the downside pressure. It can drag the index down to 65,000-64,800.
The region between 65,000 and 64,800 is a crucial support zone. As long as the Sensex stays above this support zone, the bias is bullish to see a rise to 68,000 in the short term.
Medium-term view: As mentioned last week 62,500-68,000 will be the broad medium-term trading range. The Sensex will come under pressure for a fall to 62,500 if it breaks below 64,800. But such a fall could be very good buying opportunity from a long-term perspective.
Dow Jones (35,390.15)
The Dow Jones Industrial Average continued to move up for the fourth consecutive week. The index was up 1.27 per cent last week. It has surged over 9 per cent in the last four weeks. The expected rise to 35,500 has almost happened. The Dow Jones made a high of 35,399.44 before closing the week at 35,390.15.
Outlook: Crucial resistances are coming up at 35,500 and 35,750. As such there could be limited upside from here for the Dow Jones. Whether it manages to breach 35,750 or not will determine the next move.
A strong break above 35,750 will retain the bullish momentum. Such a break can take the Dow Jones up to 36,300-36,500 going forward.
But failure to breach the 35,500-35,750 resistance zone and a turnaround from there could bring the index under pressure. In that case, the Dow Jones can remain vulnerable for a fall to 34,000 and even lower.
Overall, the price action in the 35,500-35,750 region will need a close watch this week.