Index Outlook. Nifty 50, Sensex: More rise on the cards

Nifty 50 and Sensex have risen well last week as expected. Both the indices were up over a per cent each and have closed the week on a strong note. Importantly, the rise in the Indian benchmark indices have come in at a time when the US markets were down.

The divergence in the Indian benchmark indices from the US equities is a positive. In addition to that, intermediate dips were continuously bought all through last week in both the Sensex and Nifty 50. That indicates the presence of strong buyers at lower levels. It keeps the overall outlook bullish for both the Sensex and Nifty. The outcome of the Karnataka election results might cause some jitters initially. However, the overall uptrend is likely to remain intact.

Among the sectors, the BSE Metals and BSE Capital Goods, down 2.57 and 1.7 per cent respectively, fell the most. The BSE Auto and BSE Bankex were the outperformers. The indices were up 4.33 per cent and 2.67 per cent respectively.

FPIs Buy

Nifty Prediction for the week May 15-19, 2023 by BL GURU

The Indian equity segment has been getting strong foreign money inflows over the last two weeks. The foreign portfolio investors (FPIs) pumped $1.50 billion into the Indian equities last week. The equity segment has seen an inflow of about $2.83 billion so far in this month. Continuing flows will be positive for the Sensex and Nifty.

Nifty 50 (18,314.80)

Nifty began the week on a strong note with a sharp rise on Monday. But thereafter the index remained broadly stable in a sideways range for the rest of the week. The level of 18,200 has provided strong support all through the week. Nifty made a high of 18,389.70 before closing the week at 18,314.80, up 1.36 per cent.

The week ahead: The near-term outlook is bullish. The level of 18,200 will continue to act as a strong support. A rise to 18,550-18,600 can be seen in a week or two. Intermediate resistance is around 18,350. A sustained break above it can take the index upto the above-mentioned level.

This bullish outlook will get delayed if Nifty declines below 18,200. In that case, a fall to 18,100 or 18,000 and 17,900 can be seen in the near term. 18,000-17,900 is a strong short-term support zone. So, a fall beyond 17,900 is unlikely. A fresh upmove from around 18,000 will take the Nifty up to 18,300-18,350 initially and then to 18,500 eventually.

Graph Source: MetaStock

Medium-term outlook: The bigger picture is also bullish. Strong support is in the 18,000-17,800 region. As long as Nifty stays above 17,800, we keep our bullish view intact to see 19,000 on the upside. Resistance is around 18,600. A break above it will clear the way for the rally to 19,000. That will also keep the doors open to see 20,000-20,500 on the upside over the long term.

This bullish view will come under threat if the index declines below 17,800. In that case, a fall to 17,500 can be seen. Such a fall will reduce the chances of seeing 19,000 and higher levels. A further fall below 17,500 will then confirm a trend reversal. However, such a sharp downmove looks less probable in the absence of any new negative triggers.

Nifty Bank (43,793.55)

Last week, we had cautioned that Nifty Bank index will be in a danger to see more fall if it fails to rise above 43,000. The index rose back above 43,000 on Monday itself, and then continued to sustain well above it. It has closed the week on a strong note at 43,793.55, up 2.65 per cent.

The strong close on Friday leaves the near-term outlook bullish. Support is at 43,250 and 42,820 — the 21-Day Moving Average (DMA). As long as the index stays above these supports, a rise to 44,500-44,600 can be seen in the near term. A break above 44,600 will see the upside extending up to 45,000 and 45,500 over the next two-three weeks or later than that.

The near-term outlook will turn negative if the index declines below 42,820. In that case, a fall to 42,500 is possible.

Graph Source: MetaStock

Medium-term outlook: The bigger picture is bullish. Strong support is in the 42,000-41,700 region. As long as the index stays above this support zone, the upside is open to test 48,000 and higher levels over the long term. A strong break above 45,500 will open the doors for this rally.

Sensex (62,027.90)

Sensex has held well above 61,000 and the rise to 62,500 is happening now in line with our expectation. Sensex has closed the week at 62,027.90, up 1.59 per cent.

The week ahead: The near-term outlook is bullish. Immediate support is around 61,500. As long as the index stays above this support, a rise to 62,800-63,000 is possible in the near term.

This rise will get delayed if Sensex declines below 61,500. In that case, a fall to 60,800 or 60,500 can happen first and then a fresh rally can be seen.  But as seen from the charts, a fall below 61,500 is less likely.

Graph Source: MetaStock

Medium-term outlook: The big picture is very bullish. Strong support is in the 60,500-60,000 region. A rise to 64,000 can be seen initially. From a long-term perspective, Sensex is looking strong to target 66,000 and 68,000 on the upside in the coming months.

Short-term targets

18,550 – 18,600 on the Nifty

62,800 – 63,000 on the Sensex

44,500 – 44,600 on the Nifty Bank

Dow Jones (33,300.62)

The resistance at 33,800 mentioned last week has held very well. The Dow Jones Industrial Average made a high of 33,772.09 and has declined sharply. The index continued to trade under pressure all through the week. It has closed at 33,300.62, down 1.03 per cent for the week.

The weekly chart is giving a negative signal. The index looks weak and there could be room for a fall to 32,700-32,500. Intermediate support is at 33,000. A break below it can trigger this fall.

Graph Source: MetaStock

However, the price action on the daily chart indicates strong buying at lower levels below 33,300. This still keeps the chances alive for the Dow to sustain above the 33,300-33,000 support zone and rise back again.

So broadly the picture is mixed and unclear. The Dow Jones can rise either from current levels itself or after a fall to 32,700-32,500. In either case, 33,800 will be a crucial resistance. The Dow has to rise past this hurdle to bring back the bullishness. Only in that case, the chances of a rise to 34,000 and 34,300-34,500 will come into the picture.