Index Outlook: Nifty50, Sensex likely to continue uptrend

Nifty 50 and Sensex continue to make new highs. The benchmark indices oscillated in a sideways range for most part of last week. But on Friday they gained momentum and rose well to close the week on a strong note. Both the Sensex and Nifty 50 were up 1.2 per cent each last week.

The overall outlook remains bullish. Sensex and Nifty have room to rise further and make more new highs going forward. Any intermediate dips will be short-lived. There are supports to limit the downside in the benchmark indices.

Barring a few, most sectoral indices closed in green last week. The BSE IT index outperformed by surging 4.9 per cent. This was followed by the BSE Metals index, which was up 3.28 per cent. The BSE Power and BSE Consumer Durables indices under performed last week. The indices were down 1.39 and 1.92 per cent respectively.

FPI flows

Strong foreign money inflows continue to support the Indian benchmark indices to make new highs. The foreign portfolio investors (FPIs) bought $1.06 billion in the equity segment last week. For the first time since 2020, the FPIs have pumped in over $1 billion in Indian equities for four consecutive weeks. The month of July has seen a net inflow of $3.73 billion so far.

Nifty 50 (19,564.50)

Nifty managed to sustain well above 19,300 last week. Although it struggled to breach 19,500 almost all-through the week, the index surpassed this hurdle on Friday and has closed on a strong note at 19,564.50, up 1.2 per cent for the week.

Short-term view: The outlook is bullish. Supports are at 19,420 and 19,360. Immediate resistance is at 19,650. A strong break above it can take the Nifty up to 19,780-19,800 this week.

In case Nifty fails to breach 19,650, it can remain stuck in between 19,360 and 19,650. The short-term outlook will turn negative only if the index declines below 19,360. In that case, a fall to 19,100-19,000 is possible. The region between 19,100 and 19,000 is a strong support zone. As such a fall below 19,000 is unlikely in the short term.

Preference will be to see the Nifty sustaining above 19,360 and rise to 19,780-19,800 breaking above 19,650.

Graph Source: MetaStock

Medium-term view: The region between 19,000 and 18,800 is a strong support zone. As long as the Nifty stays above this support zone, the outlook is bullish. Intermediate dips to 19,000 if seen will be a good buying opportunity from a long-term perspective. Nifty has potential to target 20,200, if the rise above 20,000 is seen in this quarter itself or 20,400 if that happens in the next quarter.

However, the levels of 20,200 and 20,400 are strong long-term trendline resistances on the quarterly chart. So, the chances of a sharp correction from 20,200-20,400 cannot be ruled out. As such when Nifty breaks above 20,000, it is better to turn cautious rather than becoming overly bullish.

Sensex (66,060.90)

The rise to 66,000 happened last week in line with our expectation. The index sustained well above the mentioned support level of 65,170. Sensex rose to a high of 66,159.79 on Friday before closing at 66,060.90, up 1.2 per cent for the week.

Short-term view: The outlook is bullish. Immediate resistance is at 66,450. A break above this resistance can take the Sensex up to 66,900-67,000 during the next few weeks.

Immediate support is at 65,900. Below that 65,560 and 64,450 are much lower short-term supports. If Sensex fails to breach 66,450, and breaks below 65,900, it can fall to 65,560.

The short-term outlook will turn negative only if Sensex declines below 65,560, in which case an extended fall to 64,450 can be seen in the next couple of weeks.

Graph Source: MetaStock

Medium-term view: Strong support is in the 63,700-63,500 region. The medium-term outlook will remain positive as long as the index remains above 63,500. We expect Sensex to rise to 67,500-67,700 in this quarter. If the rise above 67,000 happens in the next quarter, then there can be an extended rise up to 68,450.

Nifty Bank (44,819.30)

Nifty Bank index dipped last week in line with our expectation. However, the pace of the down move seems to be slow. Also, the price action last week on the daily chart indicates lack of strong sellers to drag the index sharply lower. The index has closed at 44,819.30, down marginally by 0.24 per cent for the week.

Short-term view: The trend is down. There is room to dip further from current levels. However, strong supports are there to limit the downside. The 21-Day Moving Average support is at 44,400 and a trendline support is at 44,280. We can expect the index to reverse higher from either of these supports.

Immediate resistance is at 45,100-45,200. A strong break above 45,200 will boost the bullish momentum. Such a break will take the Nifty Bank index up to 46,000 in the short term.

Graph Source: MetaStock

Medium-term view: The region around 43,000 is a strong support. As long as the index trades above this support, the outlook will continue to remain bullish. Nifty Bank index can target 47,500-48,000 and even higher levels in the coming months.

Short-term targets

19,800 on the Nifty

67,000 on the Sensex

46,000 on Nifty Bank

Dow Jones (34,509.03)

The Dow Jones Industrial Average continued to oscillate up and down inside the sideways range for the fifth consecutive week. The index has been range bound between 33,600 and 34,600. Within this range, the Dow Jones witnessed a strong rise from the lower end of the range. The index has closed just below the upper end of the range at 34,509.03, up 2 per cent for the week.

Graph Source: MetaStock

Outlook: Failure to rise past 34,600 from here can keep the sideways range intact for some more time. In that case, the index can fall back to 34,000 and 33,600 – the lower end of the range.

The level of 33,600 is not only the range support, but a trendline is also poised around this level. So that makes it a very strong support. So, the bias is bullish. We expect the Dow Jones to break above 34,600 if not immediately but eventually and rise to 35,500 in the coming weeks.

COMMENT NOW