Index Outlook | Sensex, Nifty 50 are range-bound

The benchmark equity indices — the Sensex and the Nifty 50 — experienced selling pressure on Friday and gave away some of their initial gains, but managed to end on a positive note.

This week will be volatile, and investors’ focus will be on the US Federal Reserve meeting.

Nifty 50 (15,030.95)

The Nifty 50 index finished the week by climbing 92 points, or 0.6 per cent, giving away most of the gains made in the initial part of the week by declining 0.95 per cent on Friday.

A key resistance at 15,200 had limited the upside recently. The index continues to test the psychological level of 15,000.

The week ahead: The index has been in a sideways consolidation phase in a broadband between 14,630 and 15,320 over the past one month. Within this range, the index mostly hovered at 15,000.

A strong rally above the key resistance level of 15,200 can push the index northwards to 15,300 and then to 15,300-15,320 levels once again.

An upmove beyond this second resistance can take the index upwards to 15,500 or even to 15,600 levels over the short term.

That said, failure to break above 15,200 can keep the index consolidating sideways in the aforementioned band. A decline below the lower boundary of 14,630 can drag the index down to 14,500 in the ensuing weeks.

A further fall below 14,500 can pull the index lower to 14,280 and then to 14,000 in the short term. A decline under the 14,000 mark can intensify the selling interest and pull it to the next key base in the 13,500-13,600 band.

Medium-term outlook: There aren’t major changes in the medium-term trend. Both the intermediate- and medium-term trends continue to be up and intact.

We restate that the index has been on a medium-term uptrend from the September 2020 low of 10,790. However, a fall below 14,500 can drag the index lower to 14,280 and then to 14,000 levels in the coming weeks.

As long as the index trades above the significant support level of 12,750, the medium-term uptrend will remain in place.

A decisive plunge below this base will weaken the uptrend and pull the index down to the next support levels of 12,400, 12,260 and 12,000 over the medium term.

Vital resistances beyond 15,300 are at 15,500 and 15,600.

Sensex (50,792.08)

Last week, the Sensex advanced 386 points, or 0.77 per cent. However, the sharp 0.95 per cent fall on Friday keeps the index on a weak note. Having said that, if the index manages to hold above the key base level of 50,000 and reverse higher, it can underpin the bullish momentum and take the index northwards to 51,400 and then to 52,000.

But a plunge below 50,000 can pull the index down to 49,000, which has been the lower end of the sideways consolidation phase in the band between 49,000 and 52,000 for a while. We reaffirm that a strong break above 52,000 can take the index northwards to 53,000 and then to 54,000 over the medium term.

A further decline below 49,000 can drag the index lower to 48,600 and then to 48,000. A slump below 48,000 will mitigate the short-term uptrend that commenced from the base of 46,000 in late January, and pull the index to the next support level of 47,000 and 46,000 over the short term.

As the index trades above the crucial medium-term base level of 45,000, the uptrend which commenced from the September 2020 low of 36,495 will remain intact.

The next supports are pegged at 44,520 and 44,000. Investors with a long-term horizon can stay invested with a stop-loss at 40,000.

Nifty Bank (35,496.6)

In the truncated past week, the Nifty Bank remained choppy, but advanced marginally by 0.7 per cent.

The index has been in a sideways movement, largely in the band between 34,800 and 37,500 over the past one month. We restate that as long as it is range-bound in this band, traders with a short-term perspective should tread with caution.

The key resistance at 36,500 once again limited the upside in the index last week, making it a key level to watch out for. So, a strong break above this level is required to take the index higher to 37,500, which is the upper boundary of the sideways movement. A further rally above the 37,500 levels can take it to 38,000 levels in the short term. Conversely, if the index plummets below 34,800, it can trend down to test the next key support at 34,000.

A further decline below this base can pull the index down to 33,500 and 33,000 over the short term.

The short-term uptrend will be mitigated if the index falls below 33,000; it can then decline to 32,500 and 32,000 over the short term.

As long as the index trades above 29,000 levels, the medium-term uptrend that has been in place from the September 2020 low of 20,400 will remain in place.

The supports below 29,000 are pegged at 28,500 and 28,000.

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