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It was a volatile week for the Indian equity markets. After a stable beginning, the Sensex, Nifty 50 and the Nifty Bank index witnessed a sharp fall mid-week on Wednesday. But thereafter, they have managed to bounce back and recoup most of the loss. The recovery from the week’s low indicates the presence of strong buyers at lower levels. That, in turn, keeps the overall positive sentiment intact. However, on the charts, the Nifty Bank index looks relatively weaker than the Nifty.
Among the sectors, the BSE Auto, BSE Power and BSE Bankex fell the most. The indices were down 1.57 per cent, 1.53 per cent and 1.45 per cent respectively. On the other hand, the BSE Consumer Durables, BSE FMCG and BSE Healthcare indices were up over a per cent each. The indices closed higher by 1.43 per cent, 1.35 per cent and 1.09 per cent respectively.
FPI flows
The foreign portfolio investors (FPIs) continue to pour money into the Indian markets. The equity segment saw an inflow of $1.75 billion last week. In the last four weeks, there has been a strong inflow of about $7.9 billion into the equities. This could support the Indian equities and will continue to push the Sensex and Nifty 50 to new highs.
Nifty 50 (21,349.40)
Nifty touched a high of 21,593 on Wednesday and then fell sharply giving back all the gains. The index made a low of 20,976.80 on Thursday and then had risen back sharply from there. Nifty has closed the week at 21,349.40, down 0.5 per cent.
Short-term view: The strong bounce last week from the low of 20,976.80 is a positive. Immediate support is at 21,250. If the Nifty manages to sustain above this support, it can rise to 21,600-21,650 this week.
On the other hand, if the Nifty declines below 21,250, the near-term outlook will turn negative. In that case, a fall to 21,100-21,050 can be seen initially. A break below 21,050 can drag the Nifty down to 20,800-20,700 thereafter.
Considering the strong bounce seen last week, the bias is positive. As such, we expect the Nifty to sustain above 21,250 and rise to 21,650 this week. The price action thereafter will need a close watch.
Failure to breach 21,650 can drag the index down to 21,300 and lower again. On the other hand, a break above 21,650 can see an extended rise to 21,750-21,800.
To sum up, 21,250-21,650 will be the near-term trading range and 20,700-21,800 will be the short-term trading range.
Chart Source: MetaStock
Medium-term view: As mentioned last week, 21,800 is a crucial resistance. Failure to breach this hurdle immediately can drag the Nifty down to 21,000-20,500 and even lower. However, 20,500-20,000 is a strong support for now. So we reiterate that 20,000-21,800 can be the broad trading range for now.
As long as the Nifty stays above 20,000, the bias is positive. As such, a break above 21,800 can be seen eventually. Such a break can take the Nifty up 24,000-24,500 over the medium term.
The outlook will turn negative only if the Nifty declines below 20,000. In that case, though less likely, a fall to 19,000-18,500 is possible.
Nifty Bank (47,491.85)
Nifty Bank index has been stuck in a range of 46,880 and 48,220 over the last two weeks. Within this range, the index fell to a low of 46,919.70 and then has risen back well. The index has closed the week at 47,491.85, down 1.35 per cent.
Short-term view: Unlike the Nifty 50, the bounce in the Nifty Bank index is not showing strength. The price action on the daily chart indicates that the index is struggling to get a strong follow-through rise above 48,000. That leaves the bias slightly negative for the near term. As such, the chances are high to see a fall again to 47,000 or even 46,880 – the lower end of the range. A decisive break below 46,880 can drag the Nifty Bank index down to 46,400-46,300.
The region between 48,000 and 48,200 will be an important resistance zone. A sustained break above 48,200 is needed to gain bullish momentum. Such a break will take the Nifty Bank index upto 49,700-49,900 in the short term.
Chart Source: MetaStock
Medium-term view: As mentioned last week, 49,900 and then 50,300-50,600 are strong resistances that can cap the upside for now. Failure to rise past these hurdles can trigger a corrective fall to 48,000-47,000 or even 46,000 in the coming weeks. However, from a long-term perspective, that corrective fall will be a very good buying opportunity.
Sensex (71,106.96)
Sensex rose to a high of 71,913.07 initially, but failed to sustain. The index tumbled from that high and made a low of 69,920.39 on Thursday. However, Sensex managed to bounce back from this low recovering most of the loss. The index has closed the week at 71,106.96, down 0.53 per cent.
Short-term view: The outlook is positive. Support is at 70,250-70,200. A rise to 71,900-72,000 looks likely. A decisive break above 72,000 will boost the bullish momentum. Such a break will take the Sensex up to 73,300-73,500 in the short term.
The short-term outlook will turn negative only if the Sensex declines below 70,200. In that case, Sensex can fall to 68,000-67,700.
Chart Source: MetaStock
Medium-term view: As mentioned last week, 69,000-67,000 is a broad support zone. As long as the Sensex trades above this support zone, the outlook is bullish to target 76,500 and even 78,500 over the medium/long term.
Dow Jones (37,385.97)
The Dow Jones Industrial Average was range bound and stable last week. It fell to a low of 37,073.04 mid-week, but then managed to bounce back and recover all the loss. The index has closed the week at 37,385.97, up 0.22 per cent.
Chart Source: MetaStock
Outlook: The view remains bullish. There are strong supports at 37,300 and 37,100. Dow Jones can rise to 38,000-38,200 in the coming weeks. The near-term outlook will turn weak only if the index declines below 37,000. In that case, a fall to 36,500 can be seen.
From a big picture perspective, there is a strong support in the 36,500-36,000 region. So, as long as it stays above 36,000, the Dow Jones has the potential to target 39,000-39,300 in the coming months.
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