Nifty 50 and Sensex seems to be losing strength. The rally in the benchmark indices seems to be fizzling out. After sustaining higher and stable in the first half, the Sensex and Nifty fell, giving back all the gains towards the end of last week. The Dow Jones Industrial Average in the US remained weak all through last week. That, in turn, kept Indian markets subdued. The coming week is going to be very important. There is a crucial support for the indices near current levels. Failure to bounce back immediately can trigger a corrective fall going forward.

All the sectoral indices ended in red last week. The BSE Metal index was beaten down the most. It was down 2.41 per cent. The BSE FMCG, Realty, Oil & Gas and Consumer Durables indices were all down over 2 per cent last week.

FPIs Buy

The foreign portfolio investors (FPIs) continue to buy the Indian equities for the ninth consecutive week. The equity segment saw a strong inflow of about $1.74 billion last week. The month of June has seen a net inflow of $3.72 billion.

Nifty 50 (18,665.50)

Nifty remained higher but stable in the first half of the week. However, it was not gaining strength to break above 18,900. The index witnessed a sharp fall in the second half of the week giving back all the gains made earlier. It has closed the week at 18,665.50, down 0.85 per cent.

Short-term outlook: Failure to break above 18,900 last week indicates lack of fresh buyers in the market. This leaves the index vulnerable for a fall. A crucial support is near current levels at 18,650. Nifty has to sustain above this support and bounce back immediately to get a breather. That will keep the chances of seeing 19,000-19,100 on the upside alive. However, as mentioned last week, 19,000-19,100 is a strong support zone from where a corrective fall is possible.

On the other hand, if the index breaks below 18,650 it can come under pressure. In that case, Nifty can see a corrective fall to 18,400 initially and then to 18,200-18,100 eventually.

Broadly, Nifty is getting ready for a correction. Whether this correction is going to happen from here itself or after one more leg of upmove will have to be seen.

Graph Source: MetaStock

Graph Source: MetaStock

Medium-term outlook: The medium-term trend continues to remain up; 18,200-18,100 and 18,000-17,900 are the important support zone. As long as the Nifty trades above these supports, the outlook will remain bullish. As such, the fall to 18,200-18,100 mentioned above can be a good buying opportunity from long-term perspective. A fresh leg of rally from around 18,000 will have the potential to break the resistance around 19,100. Such a break will open the doors for the Nifty to target 20,000-20,200 and even 20,500.

The outlook will turn bearish only if Nifty declines below 17,900. In that case, a fall to 17,500 is possible.

Sensex (62,979.37)

Sensex has come down to close below 63,000 again last week. The index made a high of 63,601.71 on Thursday and fell giving back all the gains. Sensex has closed the week at 62,979.37, down 0.64 per cent. However, on the charts, Sensex has very limited room on the downside from here and is not looking as weak as the Nifty.

Short-term view: Immediate supports are at 62,950 and then in the 62,850-62,800 region. If it manages to sustain above 62,800, there are chances for it to bounce back above 63,000 again. That will still keep the chances of the index touching 64,000-64,300 on the upside alive. Thereafter a corrective fall can begin possibly.

But, if Sensex declines below 62,800, it can fall to 62,300-62,200 this week. Thereafter, the price action will need a close watch to see if a reversal is happening or not.

Graph Source: MetaStock

Graph Source: MetaStock

Medium-term view: The big picture is bullish. Support is in the 62,000-61,900 region. Below that 60,600 is the next strong support. The correction can extend up to 60,600 if Sensex breaks below 61,900. However, such a fall can be a good buying opportunity.

Overall, the medium-term trend is still up. Sensex can target 67,500-68,000 in the coming months. But whether the rally is going to happen from around 62,000 itself or after a steep correction to 60,600 will have to be seen.

Nifty Bank (43,622.90)

Nifty Bank is struggling to breach 44,000. The index failed in its several attempts made last week to rise past this level. Nifty Bank index has closed the week at 43,622.90, down 0.73 per cent.

Short-term view: The short-term outlook is negative. There is a clear rounding pattern being formed on the daily charts. This leaves the chances high for the index to see a fresh fall in the coming days high. Support is at 43,300. A break below it can drag the Nifty Bank index down to 42,300 and 42,000 in the short term.

Resistances are at 44,000 and 44,400. To avoid the above-mentioned fall to 42,300-42,000, the index has to break 44,000 first and then see a subsequent rise above 44,400.

Graph Source: MetaStock

Graph Source: MetaStock

Medium-term view: The region around 42,000 is a very strong support for the index. As long as the Nifty Bank stays above 42,000, the outlook will continue to remain bullish. As such, the door is still open for the index to target 47,500-48,000. A break above the intermediate resistance at 45,500 will trigger this rally.

The outlook will turn negative only if the Nifty Bank index breaks below 42,000. In that case, the index can decline to 41,000-40,000. But that looks less probable.

Supports to watch
18,650 on the Nifty
62,800 on the Sensex
33,650 on the Dow Jones
Dow Jones (33,727.43)

The Dow Jones Industrial Average failed to sustain above 34,000 and has declined sharply. The index opened the week with a gap-down and remained under pressure all through the week. It has closed the week at 33,727.43, down 1.67 per cent.

Graph Source: MetaStock

Graph Source: MetaStock

The immediate outlook is mixed. Immediate support is at 33,650. If the Dow manages to sustain above this support, it can rise back to 34,500 again. But a break below 33,650 can increase the downside pressure. Such a break can drag it to 33,300-33,100. However, the broader picture will continue to remain positive even if the fall to 33,100 happens. Because, the region around 33,000 is a strong support that can limit the downside. So, the Dow Jones can see a bounce back from around 33,000 and keep the broader uptrend intact.