In sync with global markets, the domestic equity indices witnessed s strong rally in the past week. The short-covering on April month expiry also pushed the key benchmark indices — the Sensex and the Nifty — higher.

However, the US and Asian markets experienced selling pressure on Friday, which may get reflected in the domestic indices with a weak opening this week. Selling interest and profit-booking can keep the benchmark indices under pressure.

Therefore, investors should thread with caution in the coming weeks.

Nifty 50 (9,859.90)

The Nifty 50 index skyrocketed 705 points, or 7.7 per cent, in the truncated week, decisively breaching a key short-term, trend-deciding level in the 9,500-9,600 band.

But it faces another crucial resistance ahead at the 10,000 mark.

The week ahead : Last week, the Nifty extended the rally by initially surpassing the immediate resistance at 9,280 and, thereafter, it breached the aforementioned band. However, the index has a significant barrier on its onward journey, at 10,000. An emphatic break above this hurdle is needed to strengthen the short-term uptrend that commenced from the March low of 7,511. An emphatic break above 10,000 can push the index northwards to 10,335 and then to 10,500 in the coming weeks.

If the index fails to move beyond 10,000, a pull-back can be witnessed and it can fill the gap formed on Thursday by declining to 9,600 levels.

A conclusive fall below the next support level of 9,400 will bring back selling pressure on the back of profit-taking and drag the index further to down to 9,100 and then to 9,000.

An empathic plunge below the 8,800 will the mar the short-term uptrend and pull the index to 8,600 and then to 8,400 levels. The key resistances above 10,500 are at 10,750 and 10,830.

We reaffirm that a decisive tumble below the psychological base level of 8,000 can strengthen the downtrend and pull the index down to 7,800 and 7,500 levels.

Medium term : The index continues to be in a medium-term downtrend as long as it trades below the crucial medium-term resistance in the 10,000-10,150 band. A strong break above this band will alter the downtrend and pave the way for an upmove to 10,335 and 10,500 over the medium term.

The next medium-term resistances are pegged at 10,750 and 11,000. On the other hand, key level of 9,000 could provide base. But a slump below this support will underpin the downtrend and pull the index down to the subsequent key medium-term support at 8,400.

The supports below this level are at 8,000 and 7,500.

Sensex (33,717.6)

The Sensex jumped 2,390 points, or 7.6 per cent, in the previous week, surpassing a crucial barrier at 33,000. This level can act as a key support now.

Going forward, the Sensex faces a significant resistance at 34,000 and 34,500 levels.

A strong break above this resistances will reinforce the bullish momentum and take the index northwards to 35,000 and then to 35,500 levels.

Conversely, if the index fails to take support at 33,000, a decline to 32,500 and then to 32,000 is possible in the ensuing weeks. The supports below 32,000 are at 31,000 and 30,500. But the on-going short-term uptrend will be mitigated if the index decisively breaks below the psychological support level of 30,000; the supports at 29,000 and 28,500 will come into play.

As long as the index trades above 29,500, the short-term uptrend that started from the March low of 25,638 will stay intact. Investors with a long-term view can buy in dips with a revised stop-loss at 27,500.

Nifty Bank (21,534.50)

Last week, the Nifty Bank jumped 1,947 points, or almost 10 per cent, outperforming the bellwether indices. This rally surpassed a vital resistance at 21,000, but the index faces a key hurdle at 22,000.

A strong break above this level is required to strengthen the short-term uptrend and take the index northwards to 23,000 in the coming weeks. Having said that, a fall below the immediate support level of 21,000 can pull the index lower to 20,500 and then to 20,000 levels.

A further decline below 20,000 can drag it down to 19,000. Traders should tread with caution as long as the index is range-bound between 21,000 and 22,000.

A break above 22,000 will be a cue for initiating fresh long positions with a fixed stop-loss.

Equally, if the index falls below 21,000, traders can go short with a fixed stop-loss. The key supports below 19,000 are placed at 18,500 and 18,000. A plunge below the short-term, trending-deciding level of 19,000 will mar the current uptrend.

Global cues

The Dow Jones Industrial Average index tumbled 2.5 per cent on Friday, eroding the initial gains, and closed marginally in the negative territory at 23,723 in the previous week. The index tests a key resistance at 24,000.

To strengthen the bullish momentum, a decisive break above this level is needed. In such a scenario, it can rally to 24,500 and then to 25,000. The immediate supports are at 23,500 and 23,000 levels.

 

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