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Nifty 50 and Sensex continued to rise for the third consecutive week. The benchmark indices made a new high last week and have closed on a strong note. Continuous buying at lower levels indicates the presence of strong buyers in the market. That leaves the broader bullish view intact. On the charts, both the Sensex and Nifty 50 are looking strong. We can expect the indices to rise further from here and make fresh highs, going forward.
Nifty Bank index, on the other hand, is not looking as strong as the Nifty. At the same time, it is not looking weak as well. As such, we can see the Nifty outperform the Nifty Bank index in the coming weeks.
Among the sectors, the BSE IT index outperformed by rising 3.87 per cent last week.
Nifty 50 (25,235.90)
As expected, Nifty broke the resistance at 24,850 and has risen well above the psychological 25,000-mark last week. The index touched a new high of 25,268.35 and has come-off slightly from there. It has closed the week at 25,235.90, up 1.66 per cent.
Short-term view: The outlook is bullish. The price action last week indicates the presence of strong buyers below 25,000. The region between 25,000 and 24,900 will be a strong support now. Nifty can rise to 25,700-25,750 this week. Thereafter, a short-lived correction fall towards 25,200-25,000 is a possibility. However, the broader trend will continue to remain up.
We can expect the Nifty to reverse higher again from the 25,200-25,000 region and rise above 25,750 eventually in the short term. That leg of rally will have the potential to take the Nifty up to 26,000-26,200 in the coming weeks.
The near-term outlook will turn negative only if the Nifty declines below 24,900. Such a fall, though less likely, can take the index down to 24,600 and lower.
Chart Source: MetaStock
Medium-term view: The overall trend continues to remain up. Strong support is in the 24,000-23,850 region. As long as the Nifty stays above this support, there is no threat for the current uptrend.
Nifty has potential to target 26,700-26,800 first from here. A break above 25,750 will clear the way for this rise. Thereafter, a corrective fall to 26,000-25,800 is a possibility. But eventually, Nifty can target 27,150 in the coming months. The price action thereafter will need a close watch. A sustained rise above 27,150 can take the index up to 27,900 by this year-end.
The levels of 27,150 and 27,900 are crucial resistances where the current uptrend can stop. A reversal from either of these two levels will have the potential to take the Nifty down to 25,000-24,000 and even lower. So, as the Nifty goes up towards 27,150 or 27,900, we have to start looking at the market from the sell side.
Nifty Bank (51,351)
Nifty Bank index rose to test the resistance at 51,400 last week as expected. It made a high of 51,466.55 before closing the week at 51,351, up 0.82 per cent.
Short-term view: On the weekly chart, the resistance at 51,400 is yet to be broken. But on the daily chart, Nifty Bank index has risen well above the trend resistance level of 51,200.
Support is in the 51,000-50,900 region. Immediate resistance is around 51,600. A break above this resistance can take the Nifty Bank index up to 52,200-52,300 in the coming weeks. The upside can extend even up to 52,500.
The level of 50,650 will be an important short-term support. The near-term outlook will turn negative if the index declines below this support. If that happens, we can see a fall to 50,100-50,000 and even 49,700 in the short term.
Chart Source: MetaStock
Medium-term view: Unlike the Nifty 50, the Nifty Bank index is not looking as bullish from a medium-term perspective. The outlook is unclear.
As we have been mentioning for some time, 52,650 (changed from the earlier level of 52,600) will be an important resistance to watch. The index has to surpass this hurdle to turn the outlook positive. Only then a rise to 54,000 and higher levels will come into the picture.
Failure to breach 52,650 will keep alive the danger of the fall to 49,000-48,000 first. However, such a fall will be a very good buying opportunity. A fresh rise from around 48,000 will have the potential to take the Nifty Bank index up to 54,000 first and 57,000 eventually over the medium term.
Whether this rise would happen from here itself or after a fall to 49,000-48,000 is not very clear now.
Sensex (82,365.77)
Sensex has risen and closed well above 82,000 last week. The index made a high of 82,637.03 before closing the week at 82,365.77, up 1.58 per cent.
Short-term view: The outlook is bullish. Support is in the 81,700-81,600 region. Sensex can rise to 83,500 and even 83,800 in a week or two. Thereafter, a corrective fall to 82,200-82,000 is a possibility. But the overall picture will remain bullish. Sensex can eventually breach 83,800 and rise to 84,000-84,300 in the coming weeks.
The short-term outlook will turn bearish only if the Sensex declines below 81,600. If that happens, a fall to 80,500 can be seen.
Chart Source: MetaStock
Medium-term view: The level of 84,300 is a crucial resistance. Failure to breach this hurdle can take the Sensex down to 81,500-81,000.
A strong rise above 84,300 will be needed for the Sensex to extend the current up-move. So, as of now, we can allow for a rise to 84,300 and then watch the price action closely to get clarity on the next move.
Dow Jones (41,563.08)
The support at 40,900 has held well as expected. The Dow Jones Industrial Average made a low of 40,842.29 and then had risen back very well. The index has closed the week on a strong note at 41,563.08, up 0.94 per cent.
Chart Source: MetaStock
Outlook: The bullish view is intact. Immediate support is at 41,150. Below that, there is a cluster of supports in the 40,800-40,500 region. The Dow Jones can rise to 42,000 this week.
A decisive break above 42,000 will boost the bullish momentum. Such a break will take the index up to 42,400 initially. It will also keep the doors open for the Dow Jones to touch 42,800 eventually in the coming weeks.
From a medium-term perspective, the Dow Jones now has potential to target 44,000 on the upside in the coming months. But thereafter a sharp corrective fall is possible.
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