Nifty 50 and Sensex scaled new highs in line with our expectations last week. But, on Friday, the benchmark indices fell sharply giving back some of the gains made during the week. However, the fall on Friday has not changed the structure of the chart. It indicates some profit-taking. The overall picture continues to remain strong. There are supports for the benchmark indices that can limit the downside from the current levels. We expect the Nifty and Sensex to rise again. One more leg of rally is likely before the uptrend halts and gets into a strong correction.
Nifty Prediction for the week July 10 - 14, 2023 by BL GURU
Among the sectors, the BSE IT and BSE Capital Goods indices were marginally down by 0.14 per cent each. Other sectoral indices closed in green. The BSE Oil & Gas index outperformed by surging 4.6 per cent.
FPI flows
The Indian equity segment continues to get strong foreign money inflows. The foreign portfolio investors (FPIs) pumped in about $2.67 billion into the equity segment last week. The consistent flows from the FPIs over the last several weeks has been a strong support for the benchmark indices. Continuing flows can take the Sensex and Nifty to further new highs in the coming weeks and aid in limiting the downside.
Nifty 50 (19,331.80)
The break above 19,260 and the rise to 19,500 mentioned last week happened in line with our expectation. Nifty made a high of 19,523.60 on Friday and fell sharply giving back some of the gains. The index has closed the week at 19,331.80, up 0.74 per cent.
Short-term view: The outlook is positive. Immediate support is around 19,200. Below that the 19,100-19,000 region is the next strong support. The chances of a fall below 19,000 is unlikely. The overall trend is up. We expect the Nifty to rise back to 19,600 and 19,800 in the short term. This rise can happen either from 19,200 itself or after an extended fall up to 19,100-19,000.
The index will come under pressure for more fall only if it declines below 19,000. In that case, 18,800 can be seen on the downside. But such a fall below 19,000 looks unlikely at the moment as fresh buyers are likely to come into the market around 19,000 levels.
Medium-term view: The big picture is also positive. Strong supports are at 19,000 and 18,800. As long as the Nifty stays above these supports, the outlook is bullish. Nifty can target 20,000-20,200 in the coming months.
However, it is important to note that the 20,000-20,200 is a long-term resistance zone. As such, we expect the current rally to halt there. A strong correction is likely thereafter. As such, it is important to turn cautious as the Nifty approaches the 20,000-mark rather than becoming over bullish.
Sensex (65,280.45)
Sensex sustained well above 64,300 and extended the rally last week. However, the expected rise to 66,350 is yet to happen. Sensex made a high of 65,898.98 and has come down from there. It has closed the week at 65,280.45, up 0.87 per cent.
Short-term view: The outlook is bullish. However, there is room to dip further before the Sensex rises back and resumes the uptrend. Immediate support is at 65,170. Below that, 64,500 and 64,300 are the next strong supports. The index can test the 64,500-64,300 supports, if it breaks below 65,170. However, a further fall below 64,300 is unlikely.
A fresh rise either from 65,170 itself or from 64,500-64,300 can take the Sensex up to 66,000-66,250 in the short term.
In case the index declines below 64,300, though less likely, it can fall to 63,200-63,000.
Medium-term view: The broader picture is positive. The 63,200-63,000 levels mentioned above is a strong support zone. As long as the Sensex sustains above 63,000, the outlook is bullish.
Sensex can rally to 67,500-68,000 in the coming months. But thereafter, the index can run into a strong correction. The outlook will turn bearish only if Sensex declines below 63,000. But that looks unlikely at the moment.
Nifty Bank (44,925)
The rise to 45,500 happened as expected last week. The Nifty Bank index surged to a high of 45,655.50 on Tuesday and then remained stable for most of the week. However, on Friday, the index fell sharply about 0.9 per cent giving back most of the gains made during the week. The Nifty Bank index has closed the week at 44,925, up 0.4 per cent
Short-term view: The immediate outlook is slightly mixed. Support is in the 44,700-44,500 region. A break below 44,500 can take the index down to 44,200 and even 44,000 this week.
Resistance is at 45,500, which is holding well for now. Nifty Bank index has to breach 45,500 to move further to 46,000 and higher levels.
On the chart, it looks like the Nifty Bank index can dip to 44,200-44,000 first before resuming the uptrend.
Medium-term view: Strong supports are at 44,000 and 43,000. The overall outlook will remain positive as long as the index trades above 43,000. Nifty Bank index can rise to 47,500-48,000 over the medium term. A decisive break above 45,500 will open the doors for this rally.
Dow Jones (33,734.88)
The Dow Jones Industrial Average failed to breach 34,500 last week. The index made a high of 34,465.60 on Monday and then continued to fall for the rest of the week. The index broke and fell below the key supports at 34,200 and 33,900. It made a low of 33,716.75 before closing the week at 33,734.88, down 1.95 per cent.
Outlook: The sharp fall last week does not look very bad on the charts. Because the weekly chart indicates that the Dow has been oscillating between 33,600 and 34,600 over the last four weeks. The region between 33,500 and 33,400 is a strong support. A fall below 33,400 is unlikely. As such, the chances are high for the Dow to breach 34,600 decisively in the coming days. Such a break can take the Dow Jones up to 35,000 and 35,500 in the coming weeks.