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Nifty 50 and Sensex began the week on a strong note but failed to sustain higher. The benchmark indices fell in the second half last week, giving back most of the gains. However, the fall was not strong. That indicates lack of strong sellers in the market to drag the indices lower. Sensex and Nifty can get a relief on Monday taking cues from the US markets. The Dow Jones Industrial Average had surged 2.12 per cent on Friday. That can aid the Indian benchmark indices to open the week with a gap-up.
Barring a few, most of the sectoral indices closed the week in green. The BSE Realty and BSE Consumer Durables indices outperformed last week. The indices were up 3.89 and 3.14 per cent respectively. The BSE Oil & Gas index, down 3.1 per cent, was beaten down the most.
Strong buying
The foreign portfolio investors (FPIs) continue to buy Indian equities. The equity segment saw an inflow of $1.57 billion last week. The month of May saw an inflow of $5.44 billion into the equity segment.
Strong foreign money inflows into the equities strengthens the long-term bullish case for the Sensex and Nifty. As such, the overall picture remains positive and the indices can scale new highs in the coming weeks.
Nifty 50 (18,534.10)
Nifty opened the week on Monday with a wide gap-up at 18,619.15. But it failed to sustain higher. The index made a high of 18,662.45 on Tuesday and reversed lower. Nifty gave back most of the gains to close the week at 18,534.10, marginally up 0.19 per cent.
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Short-term view: There is some room to fall further from here. However, the overall trend is up and the outlook remains bullish. Immediate support is around 18,450. Below that, the 21-Day Moving Average (DMA) and a trendline support are poised around 18,350. This makes it a very strong short-term support. So, the downside will be limited to 18,350 in case a break below 18,450 is seen. Such a fall to 18,350 will also be a good buying opportunity.
Resistance is around 18,600. We expect Nifty to break 18,600 and rally to 18,800 initially. A further break above 18,800 will see the upmove extending up to 19,000 in the coming weeks.
Graph Source: MetaStock
Medium-term view: The medium-term outlook is bullish. However, the region between 19,000 and 19,200 will be an intermediate resistance. So, a short-lived corrective fall from the 19,000-19,200-resistance region towards 18,700-18,600 is a possibility. But thereafter a fresh leg of upmove can begin. That will have the potential to break 19,200 and take Nifty up to 19,500-19,700 over the medium term. It will also keep the long-term bullish outlook intact for the Nifty to target 20,000-20,500.
Sensex (62,547.11)
The rise to 63,000 happened as expected last week. But the Sensex failed to sustain higher. The index made a high of 63,036.12 and reversed lower giving back almost all the gains. The index has closed the week on a flat note at 62,547.11, up 0.07 per cent.
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Short-term view: The outlook is bullish. Immediate support is in the 62,350-62,300 region. Below that, the 21-DMA at 62,045 is the next strong support. We can expect the Sensex to remain above 62,300 itself and rise back to 63,000 again this week. A sustained rise above 63,000 will take the Sensex up to 64,000-64,300 in the short term.
The index has to decline below 62,000 to become bearish in the short term. In that case, a fall to 61,000 and lower levels can be seen. However, the chances of a fall below 62,000 is unlikely.
Graph Source: MetaStock
Medium-term view: The big picture is also positive — 61,000-60,000 will be the strong support below 62,000. The outlook is bullish to breach the 64,000-64,300 resistance zone eventually in the coming weeks. Such a break can take the Sensex up to 66,000-65,000 over the medium term. But before this rally happens, a corrective fall from the 64,000-64,300 resistance zone is possible. That corrective fall can be limited to 62,000.
The long-term outlook is also bullish. We expect Sensex to target 68,000-68,500 in the coming months.
Nifty Bank (43,937.85)
Nifty Bank index broke its 43,390-44,152 range on the upside last week. But the index failed to get a strong follow-through rise. It made a high of 44,498.60 on Tuesday and fell from there giving back all the gains. The index has closed the week at 43,937.85, marginally down 0.18 per cent.
Short-term view: The 21-DMA, currently at 43,760, is giving good support for the index. Below that 43,500 is the slightly lower support available. The downside can extend up to 43,500 if the index breaks below the 21-DMA support. However, a further fall below 43,500 is less likely.
The overall outlook is bullish. We can expect the index to rise either from 43,760 itself or after a dip to 43,500. That new leg of upmove will take the Nifty Bank index up to 45,000-45,500 in the next few weeks.
Graph Source: MetaStock
Medium-term view: The big picture is positive. The region around 45,500 is an important resistance. A corrective fall from there towards 44,500-44,000 initially cannot be ruled out. But eventually we can expect the Nifty Bank index to breach 45,500 and rally to 47,000-48,000 and even higher in the coming months.
Dow Jones (33,762.76)
After a muted start, the Dow Jones Industrial Average gained momentum and surged towards the end of the week recovering all the loss. The index has closed the week at 33,762.76, up 2.02 per cent.
The 200-DMA, currently around 32,760, has been providing strong support over the last two weeks. The stock has formed a strong base around 33,000.
Graph Source: MetaStock
Immediate support is at 33,600. Below that the 21-DMA at 33,270 is the next important support. The outlook is bullish. The Dow Jones can rise to 34,200-34,300 initially. A short-lived pull-back to 33,800-33,700 thereafter is a possibility. However, the overall outlook will continue to be bullish. The index can breach 34,300 eventually and test 34,500 in the short term.
From a medium-term perspective, the Dow Jones has the potential to target 35,500 in the coming weeks.
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