Index Outlook: Nifty 50, Sensex: Upmove can gain momentum

Nifty 50 and Sensex moved up last week in line with our expectation. This keeps our overall bullish bias intact. It also leaves the door open for the indices to move further up in the coming weeks. Nifty Bank, on the other hand, is struggling to rise. Although it looks vulnerable to dip in the near term, supports are there to limit the downside. We expect the Nifty Bank index also to catch up with the Nifty and Sensex, and see a fresh rise in the coming weeks.

Among the sectors, the BSE Realty index outperformed by surging 4.13 per cent last week. This was followed by the BSE Auto and BSE Metals indices which were up 2.86 per cent and 2.4 per cent respectively. The BSE IT index was the underperformer last week. The index was down 1.33 per cent.

FPI action

The foreign portfolio investors (FPIs) sold Indian equities for the sixth consecutive week. However, the quantum of selling was comparatively low. The equity segment saw an outflow of about $215 million last week.

Nifty (19,751.05)

After making a low of 19,480 initially on Monday, Nifty managed to rise back very well last week. It made a high of 19,843.30 on Thursday. Although there was a wide gap-down open on Friday, Nifty managed to recover well and closed the week at 19,751.05, up 0.5 per cent.

Short-term view: The bias is positive. Immediate support is at 19,600. Resistance is at 19,850-19,900. As long as the index stays above 19,600, the near-term outlook will remain positive to break the 19,850-19,900 resistance zone. Such a break can take the Nifty up to 20,300-20,400 over the next couple of weeks.

In case, Nifty declines below 19,600, it can fall to 19,400-19,350. But further fall beyond 19,350 is unlikely. So, we can see a fresh rise from around 19,400-19,350 towards 19,850-19,900 first. In this case, the rise to 20,300-20,400 will get delayed.

Broadly, we retain our bullish view of seeing a rise to 20,300-20,400. But whether the rise is going to happen from here itself or after a dip to 19,400 is what have to be seen.

If a break below 19,400 happens, then 19,200-19,100 can be seen on the downside.

Chart Source: MetaStock

Medium-term view: We reiterate that 19,000-20,400 can be the broad range of trade for the medium term. Within that, we retain our bullish bias to see a break above 20,400 eventually. Such a break can take the Nifty up to 21,500 in the coming months.

The bullish outlook will go wrong only if Nifty declines below 19,000. Such a break, though less likely can take the index down to 18,000 thereafter.

Sensex (66,282.74)

Sensex broke its resistance at 66,400, but failed to get a strong follow-through rise. The index made a high of 66,592.16 and had come down from there. It has closed at 66,282.74, up 0.44 per cent.

Short-term view: The near-term outlook is slightly mixed. Immediate support is in the 66,000-65,900 region. Failure to sustain above this support can drag the Sensex down to 65,200-65,000. However, a fall below 65,000 looks less likely at the moment in the near term.

On the other hand, a strong bounce from the current levels and a sustained rise past 66,500 will be bullish to see 67,500 on the upside in a week or two.

Chart Source: MetaStock

Medium-term view: The level of 64,500 will continue to remain as a strong medium-term support. For now, 64,500-68,000 will be the broad trading range. As long as the Sensex remains above 64,500, the bias is bullish to break 68,000 and see a rise to 68,500 first. An eventual break above 68,500 will then open the doors for the Sensex to target 70,000 over the long term.

A decisive break below 64,500 is needed to turn the outlook bearish. In that case, a fall to 63,500-63,000 can be seen.

Nifty Bank (44,287.95)

As expected, Nifty Bank index sustained above 43,750 but the rise to 45,000 did not happen. The resistance at 44,600 mentioned last week held well. The index made a high of 44,710.55 and has come down from there to close at 44,287.95, down 0.16 per cent.

Short-term view: The 21-Day Moving Average at 44,771 will be an important resistance to watch. The price action on the daily chart indicates that Nifty Bank index can see some more fall from here. A revisit of 43,800 looks likely in the first half of the week.

The region between 43,800 and 43,650 is a very strong support zone. So, a break below 43,650 is unlikely. We can expect a strong reversal from the 43,800-43,650 support zone, which can take the Nifty Bank index up to 44,800-45,000 initially. An eventual break above 45,000 will then pave way for a fresh rise to 46,000-46,300 in the coming weeks.

So, though there is room to dip from the current levels the short-term outlook is bullish to see 46,000-46,300 on the upside.

Chart Source: MetaStock

Medium-term view: The outlook is bullish to see 48,650-48,700. Strong support is in the 43,500-43,000 region. The bullish outlook will get negated only if the Nifty Bank index declines below 43,000. In that case, a fall to 42,000-41,500 can happen.

Supports for the indices

19,600 & 19,400 on the Nifty

64,500 on the Sensex

43,800 & 43,650 on the Nifty Bank

Dow Jones (33,670.29)

After witnessing a strong rise on Monday, the Dow Jones Industrial Average sustained higher but in a range for the rest of the week. The index rose to a high of 33,957.72 before closing the week at 33,670.29, up 0.79 per cent. With this, the Dow Jones has snapped its three-week fall.

Chart Source: MetaStock

Outlook: The immediate outlook is slightly mixed. Support is at 33,500 and resistance is around 34,000. So, the range of 33,500-34,000 which was seen most part of last week can continue for some more time. A breakout on either side of this range will determine the next direction of move.

A break above 34,000 can take the Dow Jones up to 34,400-34,500. On the other hand, a break below 33,500 can drag it down to 33,000-32,850.