The Indian market witnessed an eventful week on the back of the announcement of results of the General Elections. After reflecting on the exit poll predictions and the actual outcome, the benchmark indices – Nifty 50 and Sensex – saw a record close on a weekly basis and posted a gain of over 3 per cent each. Nifty Bank, too, appreciated, but underperformed the benchmarks by posting a gain of 1.7 per cent.
With respect to sectors, on the NSE, barring Nifty PSU Bank, down 1.4 per cent, all others advanced over the past week. Nifty IT and Nifty FMCG were the leaders as they rallied 8.6 per cent and 7.1 per cent, respectively. Broadly, the market seemed to have shrugged off the election results and appears to have aligned to the long-term upward trajectory. Participants can brace themselves for the broader market to go higher from here.
Nifty and Bank Nifty Prediction for the week 10 Jun’24 to 14 Jun’24 by BL GURU
FPI action
Although the markets recovered strongly post the knee-jerk reaction to the election results, the foreign investors did not appear interested as they took money off the table. As per the NSDL (National Securities Depository Ltd) data, the net FPI (foreign portfolio investors) outflows in the equity segment, in the first week of June, stood at nearly $1.8 billion. If they turn buyers in the coming week, it can further boost the upward momentum.
Nifty 50 (23,290.15)
The index hit a life-time high of 23,338.7 and then dropped to mark a five-month low of 21,281.45 early last week. However, it recovered sharply in the second half and ended the week at 23,290.15, resulting in a weekly gain of 3.4 per cent.
Short-term view: The charts show a high possibility of a rally from here. Potential resistance levels on the way up are at 23,750 and 24,000. We forecast the index to reach these levels this week. But post this move, there might be a correction on the back of profit booking. This can drag the index down to 23,500.
That said, if there is a decline from here, as long as the support at 22,800 holds, the view will be bullish. But a break of this can lead to further fall, possibly to 22,400, a support. A decline below 22,400 this week is unlikely.
Medium-term view: Key price-points from the medium-term perspective are the support at 21,600 and the 200-day moving average (DMA), which is now at around 21,150. Until these levels hold true, the trend will be bullish. On the upside, the index has the potential to touch 25,000 in the coming weeks. This might not happen at a single stretch, but with intermittent corrections. On the other hand, a breach of 21,150 can open the door for a downswing to 20,000.
Nifty Bank (49,803.20)
The index containing banking stocks moved similar to Nifty 50. It marked a record high of 51,133.2 on Monday and tumbled to register a three-month low of 46,077.85 on Tuesday before snapping the losses. As it closed at 49,803.20 on Friday, the weekly gain stood at 1.7 per cent.
Short-term view: There is a resistance at 50,000. However, the near-term trend is up and so, we expect the index to surpass this barrier in the coming days and move up to 50,500 and then to 51,500.
In case there is a moderation from the current level, the index can find support at 48,100. Below this lies a rising trendline support, which the index could meet between 46,500 and 47,000. The likelihood of a fall below 46,500 this week is low.
Medium-term view: The outlook remains positive, especially so until the trendline mentioned above and the support at 45,000 remains valid. We will most likely see Nifty Bank rising to 53,000 within the next few weeks. In contrast, if the index declines below the support 45,000, it can extend the fall up to 42,500, a support.
Sensex (76,693.4)
Sensex, like the other benchmark Nifty 50, registered a five-month low of 70,234.4 early last week. But then it made a U-turn and rose sharply to wrap up the week at 76,693.4, gaining 3.7 per cent for the week. It hit an all-time high of 76,795.3 on Friday.
Short-term view: The positive bias is evident from the chart set-up, increasing the probability of a rally. This week, there is a good chance for the index to appreciate to the 79,000-80,000 price-band, a resistance. From here, there could be a minor correction, possibly to 77,000.
Conversely, if Sensex slips below its nearest support at 75,000, the bears will be able to pull it down further to 74,000. This is a strong base that can arrest the decline.
Medium-term view: So long as the index stays above the 200-DMA, which currently is at 70,170, the outlook will be bullish. Above this level, there is another important support at 72,000. As it stands, bulls are in the driving seat and are expected to lift the index up. In the forthcoming weeks, it is quite possible that it can touch 82,000.
Dow Jones (38,799)
The Dow Jones Industrial Average posted a minor weekly gain of 0.3 per cent. While the index looked positive until Friday, the sell-off towards the end of the session erased the gains, leading to a near-flat close on a weekly basis. The chart indicates that the resistance at 39,000 capped the rally. That said, it has a considerable support at 38,500.
Outlook: It is probable that Dow Jones will consolidate between 38,500 and 39,000, at least in the first half of this week. If the index breaks out of 39,000, it can result in a rally to 39,800, a barrier. Note that the price region between 39,800 and 40,060 is a resistance band.
But if the index breaks below the support at 38,500, it could fall quickly to 38,000, a support. Subsequent support is at 37,650, a critical level from the medium-term standpoint.
The next leg of move can be triggered by the outcome of the Fed policy meet on Wednesday. The US also releases the inflation data on the same day. The outcome of these events can have an impact on the Indian market too. So, traders need to be watchful of the same.