Sensex and Nifty 50 continued to move up last week in line with our expectation. The indices made a new high and then fell sharply giving back some of the gains. The indices had closed the week marginally higher by about 0.1 per cent each. The Nifty Bank index, on the other hand, remained stuck in a narrow range all through last week.
All eyes are now on the Union Budget on Tuesday. The outcome of this event would be very crucial in deciding whether the Sensex and Nifty will retain the uptrend or will run into a steep correction. A cautious approach is needed this week.
Nifty and Bank Nifty Prediction for the week 22 Jul’24 to 26 Jul’24 by BL GURU
Among the sectors, the BSE IT and BSE FMCG indices outperformed last week by rising about 2 per cent each. It is to be noted that the BSE IT index has been topping the table for the third consecutive week. The BSE Metals and BSE Capital Goods indices were beaten down badly last week. They were down 4.46 per cent and 4.47 per cent respectively.
Strong inflows
The foreign portfolio investors continue to pump money into Indian equities for the sixth consecutive week. The equity segment saw a net inflow of about $1.84 billion last week. For the month of July, the FPIs have pumped in about $3.67 billion so far.
Nifty 50 (24,530.90)
The rise to 24,850 happened last week in line with our expectation. Nifty made a high of 24,854.80 and then fell sharply from there on Friday. The index has closed the week at 24,530.90, up 0.12 per cent.
Short-term view: The reversal from around 24,850 leaves the near-term bias negative. Immediate support is at 24,400. A break below it can take the index down to 24,200-24,150 – the next important support zone. Nifty has to sustain above 24,150 and bounce back to keep the current uptrend alive. A strong bounce either from 24,400 itself or after an extended fall to 24,150 can take the Nifty up to 25,000-25,150 in the short term.
But a break below 24,150 will turn the short-term outlook bearish. It will then drag the Nifty down to 23,700-23,500 in the coming weeks.
Medium-term view: As long as the Nifty stays below the 24,800-24,850 resistance zone, the bias will remain negative. As seen from the charts and mentioned above, 24,150 will be an important intermediate support. A fall below that will confirm the reversal and take the Nifty down to 23,500. A bounce from 23,500 to 24,000 cannot be ruled out.
If the sell-off intensifies and the Nifty breaks below 23,500, the fall can extend to 23,000 and even 22,500.
In case the Nifty manages to breach 24,850 after the Budget, a rise to 25,000-25,150 can be seen.
Nifty Bank (52,265.60)
Nifty Bank index was stuck in a narrow range for the second consecutive week. The range of trade last week was 52,145-52,785. The index has closed the week on a flat note at 52,265.60.
Short-term view: The near-term outlook continues to remain unclear. The narrow range-bound move leaves no change in the short-term view.
The possible range of trade will be 52,000-53,000. A breakout on either side of these levels will determine the next leg of move.
A break above 53,000 will be bullish. It can take the Nifty Bank index up to 54,000-54,500 in the short term.
On the other hand, a break below 52,000 can drag the index down to 51,000-50,500.
Medium-term view: The broader picture is bullish with strong support around 50,500-50,000. As long as the index stays above 50,000, the upside is open to test 55,500-56,000 in the coming months. As mentioned last week, 56,000 is a strong resistance from where a corrective fall to 53,000, and even 51,000, is possible.
In case the Nifty Bank index breaks below 50,000 in a week or two after the Budget, the downside can extend up to 49,000-48,000.
Sensex (80,604.65)
Sensex rose to a high of 81,587.76 and then has come down giving back most of the gain. It has closed the week at 80,604.65, up 0.11 per cent.
Short-term view: Immediate support is at 80,500. A break below it can take the Sensex down to 79,800 – a very crucial support. Sensex has to sustain above 79,800 and get a strong bounce to keep the current uptrend intact. Only then the chances of the rise to 82,500 will remain alive.
A fall below 79,800 will turn the short-term outlook bearish. That can take the Sensex down to 79,100-79,000 and even lower.
Medium-term view: We reiterate that 82,500 is a very strong resistance for the Sensex. So, there is not much room left on the upside even if it manages to rise back from around 79,800. We expect the Sensex to see a corrective fall to 78,000-77,000 in the coming months. The big question now is whether the above-mentioned fall can happen from here itself or after one more leg of rise to 82,500. The triggers from the Budget on Tuesday will give an answer for this.
Dow Jones (40,287.53)
The Dow Jones Industrial Average surged breaking above the resistance at 40,300, but failed to sustain. It made a high of 41,376 and then fell giving back most of the gains. The index has closed the week at 40,287.53, up 0.72 per cent.
Outlook: Immediate support is at 40,200. A break below it can take the Dow Jones down to 39,950 initially. A further break below 39,950 will turn the short-term outlook bearish and drag the Dow Jones down to 39,600-39,500 this week.
The Dow Jones will have to bounce back above 40,300 again to ease the downside pressure. Such a rise will take the index up to 41,500-42,000 in the coming weeks. The price action this week will need a watch to get clarity on the next direction of move.