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The Nifty 50, Sensex and the Nifty Bank index continue to move up. Indeed, the Nifty Bank index outperformed last week by rising over a per cent. On the charts, the outlook for the Indian benchmark indices remains positive. On the other hand, the Dow Jones Industrial Average has been coming down over the last couple of weeks. The charts are showing some signs of weakness. As such, we can expect the Indian markets to outperform the US in the coming weeks.
Among the sectors, the BSE PSU and BSE Power index outperformed last week. The indices were up 1.97 per cent and 1.86 per cent respectively. The BSE IT (down 1.42 per cent) and BSE Realty (down 0.95 per cent) underperformed last week.
FPI action
Foreign portfolio investors (FPIs) continue to buy the Indian equities for the third consecutive week. The equity segment saw an inflow of $919.47 million last week. The month of March has seen a total inflow of $1.42 billion so far. This is a positive signal. If the FPIs accelerate their purchase, it can then aid the Sensex and Nifty 50 to scale more new highs going forward.
Nifty 50 (22,493.55)
Nifty began the week on a subdued note. It fell to a low of 22,224.35, but then rose sharply from there, recovering all the losses. The index has closed the week at 22,493.55, up 0.51 per cent.
Short-term view: The outlook is positive. Immediate support is in the 22,450-22,400 region. Below that, 22,150 and 22,120 are the lower supports. The chances for the index to sustain above 22,400 are high.
Nifty can rise to 22,800-22,900. The upside can extend even up to 23,000 in the short term.
The level of 22,000 is the crucial support to watch. The short-term outlook will turn negative only if the Nifty declines below 22,000. Such a break can drag the index down to 21,800 first, and then to 21,500 eventually.
Looking at the price action on the charts, a fall below 22,000 is unlikely. As such, Nifty can test 22,800-22,900 or 23,000 first before reversing lower again.
Chart Source: MetaStock
Medium-term view: The broader trend is up. However, there is not much room left on the upside. The levels of 23,150 and 23,650 are strong resistances on the long-term charts. As the Nifty approaches these resistances, we may have to turn cautious rather than becoming overly bullish. A reversal either from 23,150 or 23,650 will have the potential to drag the Nifty down to 21,000 at least.
In a worst-case scenario, a break below 21,000 will see the Nifty tumbling to 20,500-19,500. However, such a fall to 21,000 or 19,500 will be a good buying opportunity from a long-term perspective.
Nifty Bank (47,835.80)
The Nifty Bank index has risen, breaking above the key resistance level of 47,400 last week. The index touched a high of 48,161.25 before closing the week at 47,835.80, up 1.14 per cent.
Short-term view: The outlook is bullish. Strong support is in the 47,400-47,200 region. The Nifty Bank index can rise to 48,800-49,000 and even 49,500 in the next few weeks. The 49,000-49,500 band is a strong resistance. The price action, thereafter, will need to be watched for a reversal. A reversal from this resistance zone can drag the Nifty Bank index down to 48,000-47,500 again.
The short-term outlook will turn negative only if the index declines below 47,000. In that case, the Nifty Bank index will come under pressure for a fall to 46,000-45,000.
Chart Source: MetaStock
Medium-term outlook: The region between 49,500 and 49,600 is an important resistance zone. If the Nifty Bank index manages to breach 49,600, the upmove can extend up to 51,500-52,000 and even 53,000. A rise beyond 53,000 is less likely now. As such, we can expect the Nifty Bank index to see a strong correction from around 53,000, targeting 50,000 and lower levels.
On the other hand, if the index fails to break above 49,600 now and reverses lower, a sharp fall is likely. In that case, the Nifty Bank index can drop to at least 47,000. The chances of the downside extending up to 46,000-45,000 cannot be ruled out. This will keepthe sideways consolidation that has been in place since December last year intact. The consolidation range will be 44,400-49,600.
Sensex (74,119.39)
The support in the 73,300-73,000 region held very well in line with our expectation last week. Sensex made a low of 73,321.48 and rose back sharply. The rise to 74,250 almost happened in line with our expectation. Sensex made a high of 74,245.1,7 before closing the week at 74,119.39, up 0.42 per cent.
Short-term view: The outlook remains bullish. Immediate support is at 74,000. Below that, 73,450 and 73,000 are the next strong supports.
Immediate resistance is around 74,200. A decisive break above it can take the Sensex up to 76,000-76,500 in the coming weeks.
The short-term outlook will turn negative only if the Sensex declines below the 73,000-72,800 support zone. But that looks less likely at the moment. As such, we see high chances for the Sensex to see 76,000-76,500 first, before witnessing a correction.
Chart Source: MetaStock
Medium-term view: From a big picture perspective, as long as the Sensex stays above 70,000, it has the potential to target 78,000 on the upside. The rise to 76,000 will strengthen the case for this rally.
The region between 70,000 and 69,000 is a crucial support zone. Sensex has to fall below 69,000 to turn bearish.
Dow Jones (38,722.69)
The Dow Jones Industrial Average has been moving down gradually over the last couple of weeks. The price action on the charts signals lack of strong follow-through buyers above 39,000. Although it has risen back well from the low of 38,457.83, the bounce is not strong. The Dow Jones has closed the week at 38,722.69, down 0.93 per cent.
Chart Source: MetaStock
Outlook: The outlook is negative. The price action on the daily chart indicates weakness. The level of 39,000 will now act as a strong resistance. Above that, 39,300-39,400 will be the next important resistance zone. The chances are looking high for the index to remain below 39,000f. The Dow Jones can fall to 38,200-38,000 in the next few weeks.
To avoid this fall, the index has to breach 39,000 and then get a subsequent rise above 39,400.
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