Nifty 50 and Sensex broadly remained higher, but stable until Friday. The indices witnessed a sharp fall on Friday giving back almost all the gains. The Nifty Bank index, on the other hand, was under pressure in the second half of the week after rising in the first half. It also fell sharply on Friday giving back half of the gains made during the week.  Nifty Bank index looks weak to fall more from here, whereas the Nifty is slightly unclear. It could go either way within a broad range.

Among the sectors, the BSE Power and BSE PSU indices outperformed last week. The indices were up 3.33 per cent and 3.09 per cent respectively. The BSE IT index underperformed and was down 1.51 per cent.

The Dow Jones Industrial Average in the US has risen well last week. The index got a boost on Friday after the jobs data release. On the charts, the Dow Jones is looking relatively more positive and can outperform the Indian markets this week.

FPI flows

The foreign portfolio investors (FPIs) sold the Indian equities for the third consecutive week. However, the quantum of selling was less. The equity segment saw a net outflow of about $146 million. Unless the FPIs become strong buyers, the Sensex and Nifty 50 are not likely to see a convincing rally from here.

Nifty 50 (22,475.85)

Nifty inched up gradually last week initially, but then reversed sharply lower towards the end. The index made a high of 22,794.70 and fell giving back most of the gains. Nifty has closed the week at 22,475.85, up 0.25 per cent.

Short-term view: The recent price action indicates that the Nifty is struggling to rise past 22,800. This level will now be a good immediate resistance. So, a strong rise past 22,800 is necessarily needed for the Nifty to move up to 23,000 and higher.

Intermediate support is at 22,200. A break below it can take the Nifty down to 22,000-21,900. Broadly, 21,900-23,000 can be the trading range for some time. A breakout on either side of this range will determine the next move.

A break above 23,000 will be bullish to see 23,400-23,500. On the other hand, a break below 21,900 will be bearish and can increase the selling pressure. If that happens, Nifty can fall to 21,500 and even 21,000 in the short term.

Chart Source: MetaStock

Chart Source: MetaStock

Medium-term view:  As we have been cautioning for some time, Nifty is close to its top. 23,200 and 23,650 are the crucial resistances that can cap the upside. These levels can be tested if the Nifty manages to sustain above 21,900.

A corrective fall either from 23,200 itself or from around 23,650 can drag the Nifty down to 21,000 or even 20,000-19,500. Such a fall will be a very good buying opportunity from a long-term perspective.

In case the Nifty falls below 21,900 from here itself, then the above-mentioned corrective fall can happen immediately.

Nifty Bank (48,923.55)

Nifty Bank index began the week on a strong note. It surged to a high of 49,974.75 on Tuesday, but failed to sustain. The index reversed lower sharply giving back some of the gains. It has closed the week at 48,923.55, up 1.5 per cent.

Short-term view: Failure to breach the psychological 50,000-mark last week is a negative. The near-term outlook is weak. Intermediate support is at 48,000. A break below it can drag the Nifty Bank index down to 47,500 or 47,000 in the short term. The chances of the fall extending even up to 46,500 cannot be ruled out.

Key resistance is in the 50,000-50,200 region. Nifty Bank index has to surpass 50,200 to strengthen the bullish case. If that happens, 50,500-51,000 and even higher levels can be seen.

Chart Source: MetaStock

Chart Source: MetaStock

Medium-term view: The broader trend is still up and there is no change in that view. 46,000 and 44,500 are strong supports. A fall to these supports is possible if the index stays below 50,000. But such a fall will be a very good buying opportunity.

A decisive break above 50,000-50,200 will clear the way for a rally to 52,000 and 53,000. Thereafter, we can see a corrective fall towards 50,000 and lower.

Sensex (73,878.15)

Sensex broke above 75,000, but failed to sustain. It made a high of 75,119.39 and then fell sharply giving back most of the gains. The index has closed the week at 73,878.15, up 0.2 per cent.

Short-term view: Sensex has been struggling to get a strong follow-through rise above 75,100 for some time now. This leaves the near-term outlook negative for a fall to 72,000-71,900 . A break below 71,900 will see the downside extending up to 70,600-70,500 in the short term.

Sensex has to get a sustained rise above 75,100 to gain bullish momentum. If that happens, Sensex can rise to 76,000 and even higher.

Chart Source: MetaStock

Chart Source: MetaStock

Medium-term view: The upmove is losing momentum as seen from the price action in the monthly chart. So, as long as the Sensex stays below 75,000, it will remain vulnerable for a fall to 70,000 and even 68,000 in the coming months.

A decisive break above 75,000 is needed for the Sensex to clear the way for a rally to 78,000.

Key resistances
Nifty: 22,800
Sensex: 75,100
Nifty Bank: 50,200
Dow Jones (38,675.68)

The Dow Jones seems to be getting very good support around 37,800. The index has risen well and closed at 38,675.68, up 1.14 per cent. This has reduced the danger of the index falling to 37,200-37,000 that we have been expecting.

Chart Source: MetaStock

Chart Source: MetaStock

Outlook: Immediate support will be at 38,200. Below that 37,800-37,700 is the next strong support. As long as the index stays above 38,200, the outlook is bullish. A rise to 39,200 and 39,500 looks likely this week. The price action thereafter will need a close watch to see if the upmove is extending beyond 39,500 or not.

Dow Jones will come under pressure again only if it declines below 38,200. If that happens, then a revisit of the 37,800-37,700 support zone is possible.