The Indian markets were broadly stable last week. Both the Sensex and Nifty 50 oscillated in a narrow range. The price action last week indicates that the benchmark indices lack strong follow-through buying after the Budget week. However, the broader bias continues to remain positive. The strong bounce from their week’s low indicates that the Sensex and Nifty are getting bought at lower levels. This leaves the big picture positive. Thus, we retain our broader bullish view on the Sensex and Nifty.  As such, any fall from here will continue to be a good buying opportunity from a long-term perspective.

Among the sectors, metals and power were beaten down the most last week. The BSE Metal index fell 4.33 per cent, while the BSE Power index was down 3.37 per cent. The BSE Realty index outperformed by rising 2.45 per cent.

Sell-off continues

The Foreign Portfolio Investors (FPIs) continue to sell the Indian equities. Though the quantum of selling was lower last week, the FPI have been net sellers for seven consecutive weeks. They sold $474.45 million last week. So far in February, the Indian equity segment has seen a net outflow of about $1.18 billion. Unless the FPIs start to buy, the upmove in the Sensex and Nifty may not gain momentum.

Nifty 50 (17,856.50)

Nifty began the week on a weak note and fell to a low of 17,652.55 by Tuesday. Though it recovered very well thereafter, the index could not get a strong follow-through rise above 17,900. Nifty made a high of 17,916.9 and had come off from there. It has closed the week on a flat note at 17,856.50.

The week ahead: The near-term outlook is mixed. 17,600-18,000 can be the short-term range. However, within this the rise and close above 17,800 last week is a positive. So, as long as the Nifty sustains above 17,800, the bias will remain bullish to rise and break above 18,000. Such a break can take the Nifty higher to 18,200 – the upper end of the broad 17,400-18,200 range. However, some trigger will be needed for this rise to happen.

If Nifty breaks below 17,800, it can test 17,600 initially. A further break below 17,600 will see an extended fall to 17,400 – the lower end of the broad 17,400-18,200 range.

Overall 17,600-17,800 (narrow) or 17,400-18,200 (broad) is going to be the trading range for the Nifty for some time. Within this, our bias remains bullish.

Medium-term outlook: The daily chart still keeps the chances alive for seeing one more leg of fall. But the weekly charts are looking strong from a medium- and long-term perspective. The level of 17,400-17,300 will continue to be a strong support for the Nifty. As long as Nifty sustains above 17,400, the bigger picture is bullish. As such, we can expect the Nifty to break 18,200 eventually in the coming weeks. Such a break will see the Nifty targeting 19,500-20,000 and even 20,500 in the coming months.

This bullish view will get negated if Nifty falls below 17,400. In that case, 17,000-16,650 can be seen on the downside.

Sensex (60,682.70)

Sensex fell sharply initially last week. However, it managed to bounce back very well from the low of 60,063.49 and recover most of the loss. The index has closed at 60,682.70, marginally down 0.26 per cent.

The week ahead: 60,000-61,000 looks to be the near-term trading range. We need to wait for a breakout of this range to get cue on the next move. A break above 61,000 can take the Sensex up to 61,350-61,400 – the next important short-term resistance.

On the other hand, if Sensex declines below 60,000 it can fall to 59,650. On the chart, the strong bounce from near 60,000 last week leaves the bias positive. As such, we see high chances for the Sensex to break 61,000 and rise to 61,350-61,400 in the short term.

Medium-term outlook: The bigger picture is bullish. 58,000-57,500 will continue to be the strong support. As long as the Sensex trades above this support, the chances are high for the index to break above 61,400. Such a break will open the doors for the Sensex to target 64,000 initially. It will also leave the long-term bullish picture intact to see 65,500-66,000 on the upside in the coming months.

Near-term range
17,600-18,000 on the Nifty
60,000-61,000 on the Sensex
33,580-34,350 on the Dow Jones
Nifty Bank (41,559.40)

Nifty Bank index has failed to get a strong follow-through rise last week. The index was stuck inside a narrow range of 41,000-41,800 all through the week. It has closed on a mixed note at 41,559.40, up marginally 0.14 per cent for the week.

The immediate outlook is mixed. Strong resistances are at 42,000 and 42,500. The Nifty Bank index has to break above 42,500 in order to become bullish and also gain momentum. Only in that case, the index can see a rise to 44,000 again. Such a move will also indicate the beginning of a fresh leg of long-term upmove.

But if the Nifty Bank index sustains below 42,000-42,500, the downtrend will remain intact. In that case, the danger of a fall-back to 40,000 and even 38,000 will remain alive.

Overall, it is a wait-and-watch situation. We will have to watch the price action for a week or two to get a clear idea on the next direction of move.

Dow Jones (33,869.27)

The Dow Jones Industrial Average continues to oscillate in a sideways range. The index has been stuck in between 33,580 and 34,350 over the last two weeks. The immediate outlook is mixed. As mentioned last week, 32,500-34,500 can be the broad range of trade.

If the Dow falls below 33,580 it can decline towards 33,000 and 32,500 in the short term. The broader bias remains positive. As such, we expect the Dow Jones to break above 34,500 eventually, if not immediately. Such a break will pave way for a fresh rally to 35,500, going forward.

But whether this rise can happen from here itself or after a fall to 33,000-32,500 is not very clear at the moment.

Related Topics
comment COMMENT NOW