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The Indian benchmark indices, the Sensex and Nifty 50, remained subdued most part of last week. However, on Friday, the indices gained momentum and surged recovering all the loss made during the week. Sensex, Nifty 50 and the Nifty Bank index have closed in green last week. The strong rise towards the end of the week has kept the doors open for the indices to moves further up from here in the coming days.
Among the sectors, the BSE Capital Goods and BSE Metals index rose 4.27 per cent and 3.29 per cent respectively, and outperformed last week. The BSE Healthcare index was beaten down the most. The index was down 2.22 per cent last week.
FPI action
The foreign portfolio investors continue to buy Indian equities. They bought about $743 million in the equity segment last week. After witnessing an outflow of $3.38 billion in January, there was a marginal inflow of $186 million in the month of February. It will have to be seen if the FPIs accelerate their buying in March to push the Indian equities higher.
Nifty 50 (22,378.40)
Nifty began the week on a subdued note and fell to a low of 21,860.65 on Thursday. However, on Friday, the index witnessed a strong rise recovering all the loss made earlier and closed the week on a positive note. Nifty has closed at 22,378.40, up 0.75 per cent for the week.
Short-term view: Nifty has been getting strong support below 21,900 over the last two weeks. This coupled with a strong rise above 22,150 last week leaves the outlook bullish. Supports will now be around 22,100, 21,980 and then 21,900. The chances are high for the Nifty to sustain above 22,100 this week. A rise to 22,700-22,800 and even 23,000 is possible in the next two-three weeks.
The region between 21,900 and 21,850 is a very important support. The short-term outlook will turn negative only if the Nifty makes a decisive break below 21,850. If that happen, then Nifty can fall to 21,500-21,450 in the short-term.
But as seen from the price action on the charts, the preference will be to see the Nifty rising towards 22,700-22,800 and 23,000 in the coming weeks.
Graph Source: MetaStock
Medium-term view: From a big picture perspective, there is not much room left on the upside from here. So, as the Nifty moves up to 23,000 from here, we have to become more cautious rather than being overly bullish.
Strong resistances are at 23,100-23,150 and then in the 23,500-23,700 region. We can expect the current rally to halt anywhere in the above-mentioned resistance zones.
A reversal thereafter will indicate a corrective fall. That can take the Nifty down to 21,000-20,900 initially. A further break below 20,900 will see the fall extending up to 20,000 and even 19,500 in the coming months.
However, from a long-term perspective, this fall to 20,000-19,500 will be a very good buying opportunity.
Nifty Bank (47,297.50)
Nifty Bank index fell initially last week to test its support in line with our expectation. The support at 45,900 was broken, but a strong follow-through selling did not happen. The index made a low of 45,661.75 on Thursday and then rose sharply from there recovering all the loss. Nifty Bank index has closed the week at 47,297.50, up 1.04 per cent.
Short-term view: The rise and close above 47,100 last week is a positive. But there is another important resistance around 47,600. A strong break above this resistance is needed to take the Nifty Bank index further higher. That break will clear the way for the Nifty Bank index to see 48,500-48,700 in the short term.
But if the index reverses lower from around 47,600, it can fall back to 46,300-46,200. As such, the price action around 47,600 will need a close watch this week.
Graph Source: MetaStock
Medium-term view: As mentioned last week, 44,400-48,650 has been the trading range since December last year. The index is moving up within this range now and can test the upper end in the short term.
A break above 48,650 can take the Nifty Bank index up to 49,300-49,500 initially. A decisive break above 49,500 will clear the way for a rise to 51,000-51,500 and even 53,000 in the coming months.
Strong support is around 44,000. So, even if the index turns down from around 48,650 or 49,500, the downside could be limited to 44,000. Any fall to 44,000 will be a good buying opportunity from a long-term perspective.
Sensex (73,806.15)
The support around 72,000 held very well last week as expected. Sensex made a low of 72,099.32 and then rose sharply to close the week at 73,806.15, up 0.91 per cent.
Short-term view: The outlook is bullish. There is a cluster of supports in the 73,300-73,000 region. Sensex can rise to 74,250-74,300 this week. The price action thereafter will need a very close watch.
A decisive break above 74,300 will be bullish to see 75,500-76,000 on the upside. On the other hand, a reversal from around 74,300 can drag the Sensex down to 72,000 again.
Graph Source: MetaStock
Medium-term view: From a big picture perspective, the break above 74,300 mentioned above could be very bullish for the Sensex. That could keep the doors open for the index to see 78,000 on the upside over the medium term.
The region between 70,000 and 69,000 is a very strong support. Sensex has to decline below 69,000 to become bearish.
Dow Jones (39,087.38)
The Dow Jones witnessed a fall initially last week. However, it found good support around 38,800 and has risen back again from the low of 38,741.68. The Dow Jones has closed the week at 39,087.38, down 0.11 per cent.
Graph Source: MetaStock
Outlook: The price action on the daily chart indicates that there are strong buyers around 38,800. This keeps the near-term outlook positive. The Dow Jones can rise to 39,400-39,500 this week. But what happens thereafter is going to be very crucial.
A break above 39,500 can take the Dow Jones up to 40,400-40,500. On the other hand, a reversal from around 39,500 can drag the Dow Jones down to 39,000-38,800 again. In that case, the danger of seeing a strong corrective fall will remain alive.
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