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The Indian benchmark indices began the week on a weak note. The Sensex, Nifty 50 and the Nifty Bank index fell, breaking below their intermediate supports initially. However, they did not get strong follow-through selling. The benchmark indices managed to reverse higher from their lows, recovering all their losses and closing the week marginally higher.
Broadly, the short-term outlook is still unclear. We can expect the indices to oscillate in a wide range. As such, we suggest risk-averse traders to stay out of the market. Traders who wish to be in the market under the circumstances will have to be cautious and observe strict stop-loss.
Among the sectors, the BSE Realty and BSE Metals indices outperformed last week. They were up 5.27 per cent and 4.91 per cent respectively. The BSE IT index was beaten down badly and was down 5.54 per cent last week.
FPI flows
Foreign Portfolio Investors (FPIs) were net sellers of Indian equities last week. They sold about $314 million. However, for the month of March, the equity segment has seen a strong inflow of about $4.6 billion. Unless the sell-off intensifies, there is no danger of the Sensex and Nifty 50 falling sharply.
Nifty 50 (22,096.75)
Nifty broke below the 21,900-21,880 support zone and fell in the first half last week. However, the index managed to recover all the losses from the low of 21,710.20 in the second half. The index has closed the week marginally higher by 0.33 per cent at 22,096.75.
Short-term view: The outlook remains mixed. Resistances are at 22,170 – the 21-day moving average and 22,300 – a trend line. Immediate support is at 21,900. Below that 21,650 will be the next important support. So, 21,900 to 22,170 can be the narrow trading range for this week. A breakout on either side will determine whether the Nifty will go up to 22,300 or fall to 21,650. Broadly, 21,650-22,300 can be the wider trading range for the short term.
A strong break above 22,300 will be bullish to see 22,500 and 22,800 on the upside. On the other hand, a break below 21,650 can drag the Nifty down to 21,400-21,300.
Graph Source: MetaStock
Medium-term view: The level of 21,300 is going to be very crucial. Nifty has to sustain above 21,300 to keep the chances of seeing 23,000 levels alive.
However, if a fall to 21,300 happens from here, that will turn the short-term charts weak. So, that might reduce the chances of a rally to 23,000 after that. If that rise has to happen, a strong trigger would be needed.
As we have been cautioning over the last few weeks, there is not much room left of the upside. So, the rise to 23,000 will have to be looked at cautiously, rather than becoming overly bullish.
A break below 21,300 will drag the Nifty down to 20,800 and 20,500, initially. If the sell-off worsens, the chances of the downside extending up to 20,000-19,500 cannot be ruled out.
From a long-term perspective, the fall to 20,000-19,500 will be a good buying opportunity.
Nifty Bank (46,863.75)
Nifty Bank fell below 46,000, but did not sustain. The index made a low of 45,828,80 and has risen back well, recovering all the losses. It has closed the week at 46,863.75, up 0.58 per cent for the week.
Short-term view: The outlook is unclear. Supports are at 46,150-46,000, and then at 45,800. Resistances are at 47,400 and 48,000.
So, 45,800 to 48,000 can be the broad trading range in the short term. A breakout on either side if this range will determine the next move.
A break above 48,000 can take the Nifty Bank index up to 48,500-48,650. On the other hand, a break below 45,800 can drag the index down to 45,300-45,200 and even 45,000.
Graph Source: MetaStock
Medium-term view: There is no change in the medium-term outlook. The index is still stuck in the 44,400-48,650 range. As seen from the charts, as long as the index stays above 44,000, the outlook will remain bullish. It will keep the upside open for the Nifty Bank index to target 51,000-52,000 and even 53,000. Thereafter, a corrective fall to 50,000 is a possibility.
A sustained break below 44,000 is needed to turn the outlook bearish. Only in that case will a fall to 43,000 and lower come into the picture.
Sensex (72,831.94)
Sensex broke below 72,000, but did not get strong follow-through selling. It made a low of 71,674.42 and has risen back well from there. The index has closed the week at 72,831.94, up 0.26 per cent.
Short-term view: The outlook is mixed, and the index could be range-bound. Support is in the 72,000-71,800 region. Resistances are at 73,100 and 73,450. The short-term range of trade could be 71,800 to 73,450. A breakout on either side of this range will determine the next leg of move.
A break above 73,450 will be bullish to see 74,000-74,500 on the upside. A break below 71,800, on the other hand, will be bearish. It can then drag the Sensex down to 70,500-70,000.
Graph Source: MetaStock
Medium-term view: As long as the Sensex stays above the 70,000-69,000 support zone, the uptrend will remain intact. It will keep alive the chances of seeing 78,000 on the upside. The outlook will turn bearish on a decisive fall below 69,000. It can then drag the Sensex down to 67,000-66,000.
Dow Jones (39,475.90)
Dow Jones Industrial Average surged breaking above the key resistance level of 39,200. That has negated the fall to 38,200-38,000 that we were expecting. The index made a high of 39,889.05 and has come down, giving back some of the gains on Friday. It has closed the week at 39,475.90, up 1.97 per cent.
Graph Source: MetaStock
Outlook: There is room for the Dow Jones to fall further from here, towards 39,200 this week. However, a fall beyond 39,200 is less likely. A fresh rise from around 39,200 can take the Dow Jones up to 40,100-40,200 in the short term.
There is a cluster of supports in the broad 39,200-38,800 region. The outlook will become bearish only if the Dow Jones breaks below 38,800. Such a break can drag it down to 38,500 and even 38,000 thereafter.
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