Nifty 50 and Sensex failed to sustain higher and fell sharply giving back almost all the gains made in the week earlier. Both the indices fell almost 2 per cent each last week. The Nifty Bank index also fell initially, but managed to recover some of the loss towards the end of the week. The index was down about 1 per cent last week.
All sectoral indices also ended in red last week. The BSE IT and BSE Oil & Gas indices fell the most. They were down 3.82 per cent and 3.12 per cent respectively.
Nifty and Bank Nifty Prediction for the week 03 Jun’24 to 07 Jun’24 by BL GURU
On the weekly chart, the benchmark indices have closed on a mixed note ahead of the General Election results due this week on Tuesday. The outcome of this event could cause some volatility in the markets. So, we suggest market participants to stay away and just watch how the markets react for the election results. See how the indices settle down for the week after the results. That might give some clarity on the direction of move, going forward.
FPI action
The foreign portfolio investors (FPIs) were net sellers of Indian equities last week. They sold about $424 million in the equity segment. In the month of May, the Indian equities have seen a net outflow of about $3.06 billion. It is important to see how the FPIs are positioning themselves after the election results. That would play an important role in setting the tone for the equity markets.
Nifty 50 (22,530.70)
Nifty touched a high of 23,110.80 and then fell sharply giving back all the gains. It made a low of 22,417 before closing the week at 22,530.70, down 1.86 per cent.
Short-term view: Key resistance is at 22,800. As long as the index trades below this resistance, the bias will remain negative. Nifty can fall to 22,150 and even 22,000 and 21,800 this week.
A sustained break above 22,800 is needed to ease the downside pressure. If that happens, Nifty can rise to 23,200. A further break above 23,200 can see an extended rise to 23,600-23,700.
So, broadly, 21,800 to 23,200 can be the trading range for now. A breakout on either side of this range will determine the next move.
Medium-term view: There is still room left for a rise from here. However, we continue to prefer remaining cautious as the Nifty rallies past 23,000. This is immaterial of the outcome of the elections this week.
The region between 23,600 and 23,700 is a strong resistance. We expect the upside to be capped at these levels. Key support is at 21,800. A break below it can trigger a sharp fall to 21,000. If the sell-off intensifies, then a break below 21,000 can drag the Nifty down to 20,000-19,500. However, such a fall to 21,000 and 20,000 when seen will be a very good buying opportunity from a long-term perspective.
Nifty Bank (48,983.95)
Nifty Bank index fell initially, but managed to recover some of the loss in the second half of the week. The index made a low of 48,313.60 and bounced back from there. It has closed the week on a flat note at 48,983.95.
Short-term view: On the chart, last week’s candle indicates indecisiveness in the market. Broadly we can expect a range of 48,000 to 50,000 for some time. A breakout on either side of this range will give clarity on the next move.
A break above 50,000 will be bullish. It can take the Nifty Bank index up to 51,500 and even 52,500 in the short term.
On the other hand, a break below 48,000 can drag the index down to 47,000 and even 46,000.
Medium-term view: The broader picture remains bullish. We repeat that 46,000 and 44,500 are strong supports. As long as the Nifty Bank index stays above these supports, the outlook will remain bullish for a rise to 52,000-53,000.
So, if a fall below 48,000 happens as mentioned above, then it will be a very good buying opportunity around 46,000 and 44,500.
Sensex (73,961.31)
Sensex failed to get a follow-through rise above 76,000. It touched a high of 76,009.68 and then fell sharply to a low of 73,668.73. The index has bounced slightly from this low to close the week at 73,961.31, down 1.92 per cent for the week.
Short-term view: Key resistance is around 75,000. Sensex has to break this resistance to move up towards 76,300. As long as the index stays below 75,000, the bias will remain negative. Sensex can fall to 73,000 and even 72,000 in the short term.
Overall, 72,000-76,300 can be the broad trading range for the Sensex in the short term.
Medium-term view: Sensex has to get a sustained rise above 76,000 to strengthen the bullish case from a medium-term perspective. Only then the doors will open to see a surge to 80,000 and 82,000 levels.
So, as long as the Sensex stays below 76,000, we may have to remain cautious for a fall to 71,000-70,000. Such a fall will be a very good buying opportunity from a long-term perspective.
Dow Jones (38,686.32)
The Dow Jones Industrial Average fell for the second consecutive week. The index tumbled over 2 per cent intraweek breaking below the support at 38,500. It made low of 38,000.96. However, on Friday it has bounced back well to recover most of the loss. The index has closed at 38,686.32, down 0.98 per cent for the week.
Outlook: A crucial support is at 37,850. It is important to see if the Dow Jones is sustaining above it or not. A break below 37,850 can increase the selling pressure. Such a break can drag the Dow Jones down to 37,200 and 37,000 this week. Thereafter, a bounce is possible.
To avoid this fall, the Dow Jones has to sustain above 37,850 and rise past 39,000 decisively. If that happens, it would ease the downside pressure and a revisit of 40,000 levels is possible.