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Sensex and Nifty 50 remained stable almost all through last week before the surge gathered momentum on Friday. The Nifty Bank index, on the other hand, remained strong and moved up consistently all through the week. The index surged over 3 per cent last week and outperforming the Sensex and Nifty. The strong rise last week indicates the strength in the market. That leaves the overall bullish outlook intact.
Among the sectors, the BSE Realty index surged 4.67 per cent and outperformed last week. The BSE IT index, down 2.83 per cent, fell the most.
The 50-basis point (bps) rate cut from the US Federal Reserve last week and its projection for another 50-bps cut for the rest of the year can keep the sentiment positive. That in turn can support the equity markets for some time.
FPIs buy
The foreign portfolio investors (FPIs) are continuing to buy the Indian equities. Last week, they bought $696 million in the equity segment. For the month of September, the net FPI inflows stand at $4 billion so far this month. Continuing foreign money inflows will aid the Sensex and Nifty to attain new highs, going forward.
Nifty 50 (25,790.95)
Nifty has risen sharply breaking above the resistance at 25,470 as expected. The index made a new high of 25,849.25. It has closed the week at 25,790.95, up 1.71 per cent.
Short-term view: The outlook is bullish. Nifty can rise to test the 25,900-25,950 resistance zone this week. A strong break above 25,950 can take the index further up to 26,100-26,200.
Support is in the 25,550-25,500 region. This can limit the downside if there is a reversal from around 25,950. The region between 25,200 and 25,000 will continue to act as a strong short-term support.
Chart Source: MetaStock
Medium-term view: The broader uptrend is intact. Nifty can target 27,150 or 27,900 as long as it stays above the 24,000-23,800 support zone. As mentioned last week, the levels of 27,150 and 27,900 are crucial resistances to watch. We see high chances for the current rally to halt anywhere there. A reversal thereafter will trigger a corrective fall to 26,000-25,000. The chances of the fall extending beyond 25,000 will have to be gauged at that time.
So, as the Nifty goes above 27,000, we may have to turn cautious. That will be the time to look at the market from the sell side rather than becoming more bullish.
Nifty Bank (53,793.20)
The rally to 54,000 has happened much faster than expected. Nifty Bank index touched a high of 54,066.10 and has come off from there slightly. The index has closed the week at 53,793.20, up 3.57 per cent.
Short-term view: The outlook is bullish. Resistance is at 54,600, which can be tested this week. Failure to breach this resistance on the first attempt can trigger a corrective fall. That can take the index down to 53,000-52,800. However, a fall beyond 52,800 is less probable. Fresh buyers are likely to come in and limit the downside.
A fresh rally from around 53,000 will have the potential to take the Nifty Bank index up to 55,500-55,700 in the short term.
Chart Source: MetaStock
Medium-term view: The strong rise last week has strengthened the bullish case. The Nifty Bank index may now have the potential to target 56,500-57,000 on the upside.
However, this rise may not come easily as there is a cluster of resistances ahead. The levels which can make intermediate pause in the rally are 54,600-54,800 and 55,700. As such, intermediate corrections are possible from these resistance levels before the Nifty Bank index rallies to 57,000 eventually in the coming months.
Sensex (84,544.31)
Sensex rose well beyond our expected level of 84,300. The index made a high of 84,694.46 before closing the week at 84,544.31, up 1.99 per cent.
Short-term view: The outlook is bullish. Sensex can rise to 85,500-85,600 from here. Failure to breach 85,600 can trigger a corrective fall to 83,500-83,400. A fresh rise thereafter will have the potential to breach 85,600. Such a break can take the Sensex up to 87,000-87,500 in the coming weeks.
The short-term outlook will turn bearish only if the Sensex declines below 82,000. Such a break, though less likely now, can drag the index down to 80,000.
Chart Source: MetaStock
Medium-term view: The region between 80,500 and 80,000 is a strong support. The outlook will be bullish as long as the Sensex stays above 80,000. The upside is open to target 88,000-89,000 in the coming months.
Although Sensex does have a strong resistance in the 88,000-89,000 region, this will coincide with the levels of 27,150 and 27,900 on the Nifty. So, we will have to tread with caution as the Sensex enters the 88,000-89,000 zone.
Dow Jones (42,063.36)
The rise to 42,200 almost happened last week in line with our expectation. The Dow Jones Industrial Average made a new high of 42,160.91 and has come off slightly from there. The index has closed the week at 42,063.36, up 1.62 per cent.
Chart Source: MetaStock
Outlook: The outlook is bullish. Supports are at 41,900 and 41,650. Immediate resistance is in the 42,250-42,300 region. As long as the Dow stays above the 41,900-41,650 supports, the bias will remain positive to breach 42,300. Such a break can take the Dow Jones up to 42,800-42,900 in the short term.
From a medium-term perspective, the Dow has the potential to target 44,000-44,500 on the upside in the coming months. Thereafter, a correction is possible.
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