Nifty 50 and Sensex broadly remained stable, and range bound last week. Both the indices were up marginally by about 0.8 per cent each. But the Nifty Bank index, on the other hand, witnessed a strong rise last week. The index has risen breaking above its resistance and has closed the week on a strong note. Nifty Bank index was up over 2 per cent last week. It is looking bullish and much stronger than the Sensex and Nifty. The strength in the Nifty Bank index is likely to take the Sensex and Nifty also higher, going forward. So, overall, the picture is likely to remain positive in the short term.

Although there is no sign of a reversal yet, we reiterate to remain careful. Strong long-term resistances are ahead with the potential to halt the rally. So, as the benchmark indices move up from here, more caution is needed rather than becoming overly bullish.

All the sectoral indices ended in green last week. The BSE Metals and BSE Power indices outperformed by surging 4.75 per cent and 4.71 per cent.

FPI flows

The foreign portfolio investors (FPIs) were net sellers of Indian equities last week. However, the quantum of selling was less. The equity segment saw a net outflow of $38 million last week. The FPI flows in the coming weeks will need a close watch. If they increase their selling, then the Sensex and Nifty can come under pressure.

Nifty 50 (22,513.70)

Nifty oscillated between 22,300 and 22,620 last week.  The index has closed the week at 22,513.70, up 0.84 per cent.

Short-term view: The weekly candles indicate indecisiveness in the market. However, the price action on the daily candles is relatively positive. Supports are at 22,350, 22,230 and 22,150. So broadly, 22,150 to 22,350 will be a very good support zone for this week. As long as the Nifty stays above 22,150, the short-term outlook is positive. A rise to 22,800 – the next important resistance, is possible in the near term. A strong break above 22,800 will then clear the way for an extended rise to 23,000 and 23,200 in the short term.

In case the Nifty declines below 22,150, it can fall to 22,000 initially. A further break below 22,000 will turn the short-term outlook negative. Such a break can drag it down to 21,800 and 21,600.

Chart Source: MetaStock

Chart Source: MetaStock

Medium-term view: The uptrend is intact. But we reiterate that there is limited room for a rise from here. A test of 23,200 and even 23,650 is possible. But the price action thereafter will need a very close watch. A reversal from around 23,650 can trigger a corrective fall towards 22,000 and 21,500.

The level of 21,500 is a crucial support. A break below 21,500 will see the fall extending towards 20,800-20,500 or even up to 20,000-19,500. However, we repeat that such a fall towards 20,000 will be a very good buying opportunity from a long-term perspective.

Nifty Bank (48,493.05)

Nifty Bank index has surged breaking above the key resistance level of 48,000. The index made a high of 48,557.40. It has closed the week on a strong note at 48,493.05, up 2.9 per cent.

Short-term view: The outlook is bullish. The level of 48,000 will now act as a strong resistance-turned-support. Nifty Bank index can rise to 49,150 and 49,600 – the next two important resistances. The price action thereafter will need a watch.

A reversal from 49,600 can take the index down to 48,500 again. But a strong break above 49,600 will boost the bullish momentum. Such a break can take the Nifty Bank index up to 51,500 and 52,000 in the coming weeks.

The short-term outlook will turn negative only if the index declines below 47,400. In that case, a fall to 46,500 and 46,000 will come into the picture.

Chart Source: MetaStock

Chart Source: MetaStock

Medium-term view: The uptrend is gaining strength. As mentioned above, a break above 49,600 can clear the way for a test of 52,000. The upside can extend even up to 53,000. However, thereafter we can expect the index to see a reversal.

A turn-around from the 52,000-53,000 resistance zone can drag the Nifty Bank index down to 50,000 and even lower, going forward.

As the index goes up to 52,000-53,000, we have to be more cautious.

Sensex (74,248.22)

Sensex was range bound between 73,485 and 74,500 last week. The index has closed at 74,248.22, up 0.81 per cent.

Short-term view: Supports are at 73,650 and 73,300. Resistance is around 74,700. A break above it can take the Sensex up to 76,000 in the short term.

On the other hand, the near-term view will turn negative if the Sensex declines below 73,300. In that case, a fall to 72,500 and 72,000 can happen.

Chart Source: MetaStock

Chart Source: MetaStock

Medium-term view: The outlook is bullish as long as the Sensex stays above 72,000. There is potential to see 78,000 on the upside. Thereafter a corrective fall to 74,000-72,000 can happen.

To negate the rise to 78,000, Sensex has to decline below 72,000 from here itself. In that case, the Sensex can fall to 70,000 and lower.

Short-term targets
Nifty: 23,000-23,200
Sensex: 76,000
Nifty Bank: 49,600
Dow Jones (38,904.04)

The Dow Jones Industrial Average fell sharply breaking below the key support level of 39,200. We had expected the index to stay above this support and rise to 40,200. That view has gone wrong. The Dow Jones tumbled to a low of 38,559 before closing the week at 38,904.04, down 2.27 per cent.

Chart Source: MetaStock

Chart Source: MetaStock

Outlook: The immediate outlook is slightly unclear. Strong resistance is around 39,200. Support is around 38,500. So, broadly 38,500 to 39,200 can be the trading range for this week. A breakout on either side of this range will determine the next leg of move.

A sustained break above 39,200 is needed to bring back the earlier bullishness. Such a break can take the index up to 39,800-39,900 again. A subsequent rise above 39,900 will then clear the way for testing 40,200 on the upside.

On the other hand, if the Dow Jones declines below 38,500, it can fall to 38,200 and 38,000.