Technical Analysis

Will Nifty hit 17,600 this week?

Gurumurthy K BL Research Bureau | Updated on September 11, 2021

Bias is bullish, but caution is warranted

The Indian equity indices remained stable in the truncated week that went past. Both the Sensex and the Nifty 50 were stuck in a narrow range all through the week. Sensex traded in the range of 57,924.48-58,553.07. The index closed the week at 58,305.07, up 175.12 points or 0.30 per cent. Nifty 50, on the other hand, was up 45.65 points or 0.26 per cent for the week. Nifty 50 was also range-bound between 17,254.2 and 17,436.5 last week and closed at 17,369.25.

On the data front, India’s Index of Industrial Production data released on Friday showed slower YoY growth at 11.5 per cent for the month of July, from 13.6 per cent in June. In the coming week, the Consumer Price Index (CPI) inflation data on Monday and the Wholesale Price Index (WPI) numbers on Tuesday are important data to watch. .

Nifty 50 (17,369.25)

After surging over 3 per cent in the week earlier, Nifty 50 remained stable last week. The rally paused in the week and the index hovered at 17,400 for the most part.

The week ahead: The short-term outlook is bullish. Dips below 17,300 last week have seen fresh buyers coming into the market. This keeps high the chances of the index breaking above 17,400 decisively in the coming days. Such a break can take the Nifty up to 17,600-17,700 this week. The region between 17,600 and 17,700 is a strong near-term resistance that will need a close watch this week. Inability to break above 17,700 can drag the index down to 17,300-17,200 again.

 

The price action in the 17,600-17,700 region will need to be tracked this week. Strong support is at 17,250 and 17,200. Nifty has to break below 17,200 to come under pressure for a fall to 17,000 in the near term.

Medium-term outlook: Important supports to watch below 17,000 are at 16,600 and 16,400. The current uptrend will come under threat for a deeper correction if the Nifty breaks below 16,400. Such a break can drag the index lower to 15,500 and even 15,000 eventually in the coming weeks. At the moment, such a deeper fall looks unlikely as 16,600-16,400 looks to be a strong support that can limit the downside. As such, fresh buyers are likely to come in the 16,600-16,400 region and keep the medium-term uptrend intact. Nifty will need a strong and fresh trigger to break and fall deeply below 16,400.

Sensex (58,305.07)

After surging over 2,000 points in the week earlier, the rally in Sensex paused last week. The index failed to get a strong follow-through rise above 58,500 and remained stable below it all through the week.

The week ahead: Sensex has immediate resistances at 58,500 and 59,000. Support is at 57,500. Broadly, the index can remain in the range of 57,500-59,000 in the near term. A breakout on either side of this range will determine the next direction of move. The bias is bullish as long as the index stays above 57,500. As such, the chances are high for the Sensex to break 59,000 and rise to 60,000 and even higher levels. But we have to turn cautious if the Sensex fails to break above 59,000 from here as it would increase the probability of a strong correction in the coming weeks.

Medium-term outlook: The medium-term trend is up. But as mentioned above, that trend will come under threat of a deeper correction if Sensex fails to break above 59,000 in the coming days. Crucial support is at 57,000. Inability to sustain 57,000 and a subsequent fall below 57,000 can trigger a corrective fall to 55,000-54,000, going forward. For now, a fall below 54,000 is unlikely. We can expect Sensex to begin a fresh leg of upmove anywhere from the 55,000-54,000 region.

Nifty Bank (36,683.2)

The Nifty Bank index fell to a low of 36,151.95 on Tuesday but recovered slightly from there. 36,200 will be an important near term support to watch in the coming days. The index has to sustain above this support in order to keep the broader view bullish to test 38,500-39,000 in the coming weeks.

In case of a fall below 36,200, the Nifty Bank index can decline to 35,600 initially. A further break below 35,600 will negate the chances of seeing 38,500-39,000 on the upside. Such a break can then drag the index down to 34,200-34,000, going forward. On the charts, the bias is bullish to see 39,000 on the upside first before any correction sets in. Traders can go long on dips near 36,200 with a stop-loss at 35,900 for the target of 38,500.

Global cues

On the global front, the Dow Jones Industrial Average declined sharply last week. The index tumbled 761 points in the last week, breaking below the key 35,250-35,000 support zone. The index closed at 34,607.72, down by 2.2 per cent for the week.

The price action in the last week is indicating that a downward reversal is on the cards. Inability to rise above 35,000 from here will be bearish for the Dow to test 34,000 on the downside this week. The level of 34,000 is a very crucial support which will have to hold in order to keep the broader uptrend intact. A break below 34,000 will be bearish to see a deeper fall to 33,000 initially and then even 32,000 eventually, going forward. Such a fall can restrict the Indian indices also from surging to new highs from current levels. As such, the Dow will need a close watch this week to see how it can impact the rally in Nifty 50 and Sensex.

Published on September 11, 2021

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like