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Nifty 50 and Sensex began the week on a positive note last week. After an initial rise, the indices fell in the second half of the week losing most of the gains. Both the indices closed marginally higher for the week.
Nifty Bank index, on the other hand, outperformed last week by rising over a per cent. Indeed, the index remained broadly stable and range-bound in the second half when the Sensex and Nifty witnessed a fall. On the charts, the short-term bias continues to remain positive. We can expect the Sensex and Nifty to reverse higher again. Nifty Bank index looks much stronger with a double-bottom pattern formation on the chart. So, it can continue to outperform.
Among the sectors, the BSE Healthcare index surged the most last week. The index was up 3.12 per cent. The BSE FMCG index, down 5.21 per cent was beaten down the most.
The Foreign Portfolio Investors (FPIs) continue to sell Indian equities. However, their quantum of selling slowed in the past week. The equity segment saw an outflow of $841 million. The FPIs have been on a selling spree so far. So, it is important to watch them closely to see when they switch to the buy side of the market. That can give a major boost to the benchmark indices to see a trend reversal.
Nifty rose to a high of 23,807.30 in the first half. But then it fell in the second half giving away most of the gains. The index has closed the week at 23,559.95, up 0.33 per cent.
Short-term view: In spite of the fall from the high of 23,807.30, the short-term charts are not looking weak. Supports are at 23,400 and 23,285. As long as the index stays above these supports, the bias will remain positive.
So, a rise from either of these two supports can breach the resistance at 23,800. Such a break can take the Nifty up to 24,000 initially. A further break above 24,000 will then take the index up to 24,200 and 24,400 eventually.
This bullish view will go wrong only if the Nifty declines below 23,285. If that happens, we can see a fall to 23,000 and 22,800 again.
Chart Source: MetaStock
Medium-term view: We reiterate that 22,800-22,500 is a strong support zone. We expect the Nifty to sustain above this support and see a rise to 26,000 initially, and even to 28,000-28,500 eventually this year.
A break above 24,400 will indicate the trend reversal and open the doors for the aforementioned rally to 26,000-28,000.
A fall to 22,800-22,500 is still a possibility while the Nifty stays below 24,400. But that will give us a very good buying opportunity. So, if the Nifty goes below 23,000 again, do not panic.
Nifty Bank index has risen well breaking above the psychological resistance level of 50,000. It touched a high of 50,641.75 and then has come down from there. The index has closed the week at 50,158.85, up 1.32 per cent.
Short-term view: The outlook is bullish with a double bottom pattern formation on the chart. Supports are now at 49,800 and 49,300.
Resistance is around 51,000. A break above this resistance can take the Nifty Bank index up to 51,300-51,600 initially. A further break above 51,600 will then pave way for 52,000-52,500 in the short term.
The outlook will turn negative only if the index declines below 49,300. If that happens, 49,000 can be tested.
Chart Source: MetaStock
Medium-term view: The first support level of 47,800 is holding well for now. But, as long as the index stays below 52,500, the danger of a break below 47,800 and a fall to 46,600 will still remain alive. However, such a fall will be a good buying opportunity. We expect the downside to be limited to 46,600. A fresh rise from 46,600 can take the Nifty Bank index up to 50,000-51,000 initially. A subsequent break above 51,000 will then strengthen the case for a trend reversal and take the index up to 54,000 and higher levels going forward.
The rise to 78,800 almost happened in line with our expectation. Sensex touched a high of 78,735.41 and then fell back. It has closed the week at 77,860.19, up 0.46 per cent.
Short-term view: Support is in the 77,100-76,900 region. A bounce from this support zone can take the Sensex up towards 78,000. A strong break above 78,000 can then take the index up to 79,600, a crucial short-term resistance.
The near-term outlook will turn negative if the Sensex declines below 76,900. In that case, a fall to 76,000 is possible.
Chart Source: MetaStock
Medium-term view: The big picture is positive. Strong support is in the 75,000-74,500 region which is holding well for now. A rise above 80,000 will confirm the trend reversal. That will open the doors for a rise to 90,000 and higher in the coming months.
Any intermediate dips to 75,000, if seen, should be considered as a good buying opportunity.
The Dow Jones Industrial Average has been volatile and range-bound over the last couple of weeks. It rose to a high of 44,966.63 and has come down sharply from there giving away all the gains. The index has closed the week at 44,303.40, down 0.54 per cent.
Chart Source: MetaStock
Outlook: The struggle to breach 45,000 increases the danger of a top formation. Support is at 44,000. Dow might break this support and fall to 43,300-43,000 initially. Such a fall will also keep the danger of seeing 42,000 on the downside.
A fall to 42,000 from here will indicate a double-top formation on the chart. So, the price action in the coming weeks will need a close watch as that could set the trend for the next few months.
Published on February 8, 2025
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