Comments
Nifty 50, Sensex and Nifty Bank index moved up last week. Nifty and Nifty Bank index closed over a per cent each. Sensex was up about 0.9 per cent. The benchmark indices broke their intermediate resistances as expected last week. But only the Nifty Bank index was able to sustain above it. Both the Nifty and Sensex have come down below the resistance once again towards the end of the week. In the US, the Dow Jones Industrial Average has been struggling to bounce back.
Overall, on the charts, the Indian benchmark indices are looking mixed and unclear. They have equal chances to go either way from current levels. However, the Dow Jones is looking relatively much weaker than the Indian market. It can see a fresh fall from here, going forward.
All sectoral indices ended in green last week. The BSE PSU index surged 5.41 per cent and outperformed last week. It was followed by the BSE Consumer Durables and BSE Realty index, which were up 4.99 per cent and 4.40 per cent respectively.
FPI flows
The foreign portfolio investors continued to sell Indian equities for the second consecutive week. The equity segment saw an outflow of about $947 million. So far, there has been a net outflow of about $1.57 billion from the equity segment this month. If the FPI sell-off gathers pace, then the Sensex and Nifty can come under pressure for a sharp fall.
Nifty 50 (22,419.95)
Nifty 50 broke above 22,500, but failed to get a strong follow-through rise. The index made a high of 22,625.95 and has come down from there. It has closed the week at 22,419.95, up 1.23 per cent for the week.
Short-term view: Looking at the weekly chart, the immediate outlook is mixed as the Nifty is poised in the middle of a broad range. Support is at 22,200. If the Nifty sustains above this support, the chances are high for it to breach 22,500 and rise to 22,900-23,000 in a week or two.
But a break below 22,200 can drag it down to 22,000-21,900. In case the index declines further below 21,900, then the sell-off can intensify. If that happens, then Nifty can see a sharp fall to 21,600-21,500.
Graph Source: MetaStock
Medium-term view: The chances of the rise to 23,200 and 23,650 are still alive. But as we have been cautioning, a rally beyond 23,650 could be difficult. We expect a strong corrective fall from 23,200 or 23,650 targeting 21,000 and even 20,000-19,500 on the downside. Such a fall to 20,000-19,500, if seen, will be a very good buying opportunity for the long term.
In case the Nifty declines below 21,500 from here itself, then the above-mentioned corrective fall can happen without seeing 23,000 levels.
Nifty Bank (48,201.05)
Nifty Bank index has risen breaking above the resistance at 48,000 last week. The index made a high of 48,679.65 and has come off from there slightly. It has closed the week at 48,201.05, up 1.32 per cent.
Short-term view: Immediate support is at 48,000. If the Nifty Bank index manages to sustain above this support, the bias will remain positive. A rise to 49,500 and even 50,000 is possible in that case.
But a break below 48,000 can take the index down to 47,400 and even 47,000 this week. The price action around 48,000 will need a close watch this week.
Graph Source: MetaStock
Medium-term view: The big picture remains positive. Supports are at 46,000 and 44,500. As long as the index stays above these supports, the upside is open to test 52,000 and 53,000 first. A decisive break above the 49,500-50,000 resistance zone can trigger this rise. Thereafter, a corrective fall to 50,000 and lower is possible.
If the Nifty Bank index stays below 50,000 and falls to 46,000 or 44,500 first, then that will be a very good buying opportunity.
Sensex (73,730.16)
Sensex broke above 73,800, but did not sustain. It made a high of 74,571.25 and has come-off from there giving back some of the gains. The index has closed the week at 73,730.16, up 0.88 per cent.
Short-term view: The near-term outlook is unclear. Immediate support is at 73,480 and resistance is at 74,450. A breakout on either side of these levels will decide the next move.
A break above 74,450 will be bullish to see 75,800 on the upside. On the other hand, a break below 73,480 can drag the index down to 72,700 or even 72,250. If the fall extends beyond 72,250, then Sensex can touch 71,800 in the short term.
Graph Source: MetaStock
Medium-term view: The overall trend remains up, but the index is not showing strength to move sharply higher. A decisive break/monthly close above 75,000 is needed to boost the bullish momentum. In that case, the doors will open for the Sensex to see 78,000 and higher levels on the upside. Whether this rise will happen from here itself or after a corrective fall remains a question.
Important immediate support is at 71,800. A break below it can trigger a corrective fall to 70,000-69,000. Such a fall can be a good buying opportunity.
Dow Jones (38,239.66)
The Dow Jones Industrial Average has been attempting to bounce over the last couple of weeks. The index broke above 38,400 last week, but failed to sustain. It made a high of 38,561.50 and has come down from there. The Dow Jones has closed the week at 38,239.66, up 0.67 per cent.
Graph Source: MetaStock
Outlook: The broader picture is still weak. Key resistances are at 38,500, 38,900 and 39,100. As long as the index trades below these resistances, the bias will remain negative. Intermediate support is at 37,600. A break below it can drag the Dow Jones down to 37,200 and 37,000.
The region around 37,000 is a crucial support. A bounce from around 37,000 might have the potential to take the Dow Jones up to 40,000 over the medium term. But a break below 37,000 will be bearish to see 35,500 and 35,000 on the downside. As such, the price action around 37,000 will need a very close watch.
Comments
COMMENT NOW
