The Indian benchmark indices sustained higher and moved up last week in line with our expectation. The price action last week indicates that the sentiment broadly remains positive. On Friday, the US equities have surged following the US Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole meeting. Powell said that the time has come for policy adjustments. That in a way confirms a rate cut from the Fed in its meeting next month. Friday’s rise in the US market leaves the chances high for the Indian benchmark indices to open with a gap-up on Monday.
Among the sectors, barring the BSE Realty index (down 2.87 per cent), others closed in green. The BSE Metals index outperformed by surging 4.37 per cent.
FPI flows
The foreign portfolio investors (FPIs) bought Indian equities last week. The equity segment saw a net inflow of $584.1 million. However, for the month of August, there has been a net outflow of about $1.94 billion.
Nifty 50 (24,823.15)
The rise to 24,850 happened last week as expected. Nifty touched a high of 24,867.35 and has come-off slightly from there. The index has closed the week at 24,823.15, up 1.15 per cent.
Short-term view: The outlook is bullish. Immediate support is at 24,700. Below that, 24,500 will be the next strong support. Immediate resistance is around 24,850.
We can expect the Nifty to sustain above 24,700 and breach 24,850. That can take the index up to 25,350 and even 25,500 in the short term.
The near-term picture will turn negative only if a break below 24,500 is seen. If that happens, Nifty can fall to 24,100 and 24,000-23,900.
The region between 24,000 and 23,900 will continue to remain as a crucial support. The outlook will turn bearish only if the Nifty breaks below 23,900.
Medium-term view: As long as the Nifty stays above 23,900, the medium-term outlook is also bullish. Intermediate resistance is in the 25,600-25,700 region. A break above it will boost the bullish momentum and take the Nifty up to 26,600 and even 27,150 in the coming months.
As mentioned above, the outlook will turn bearish only if the Nifty declines below 23,900. In that case, 23,500-23,400 can be seen on the downside initially. A break below 23,400 will see the fall extending to 23,000-22,800. If the sell-off intensifies and drags the index below 22,800, then a steep fall to 22,000-21,800 is a possibility. But this is likely only in a worst-case scenario.
From a long-term perspective, the fall to 22,000-21,800, if seen, will be a very good buying opportunity.
Nifty Bank (50,933.45)
Nifty Bank index moved up gradually last week. It found good support around 50,300. The index has risen and closed the week at 50,933.45, up 0.82 per cent.
Short-term view: The immediate picture is slightly unclear. Support is at 50,600. If the index sustains above it, a rise to 51,300-51,400 is possible this week.
The region around 51,400 is an important resistance. Nifty Bank index has to breach this hurdle to gain bullish momentum. Only then the doors will open for a rise to 52,300-52,500.
On the other hand, if the index turns down from around 51,400, it can fall back to 50,700. A break below 50,700 can drag it down to 50,000-49,800.
Medium-term view: There is no major change in the big picture. The outlook is bullish. But before we get the next leg of rally, there are chances to see a fall first. As long as the index stays below 52,600 a fall to 49,000-48,500 or even 48,000-47,000 in a worst-case scenario is still possible. However, such a fall to 48,000-47,000 will be a very good buying opportunity from a long-term perspective.
Eventually, the Nifty Bank index can break above 52,600. Such a break can take it up to 54,000 first and then 57,000 in the coming months.
Sensex (81,086.21)
Sensex managed to sustain above 80,000 and has inched up slightly last week. The index made a high of 81,236.45 before closing the week at 81,086.21, up 0.81 per cent.
Short-term view: Outlook is positive. Support is in the 80,300-80,000 region. A rise to 83,000 can be seen in the short term.
The bullish view will get negated only if the Sensex declines below 80,000. In that case, a fall to 79,000 and 78,000 can be seen. But such a fall looks less likely as seen from the charts.
Medium-term view: Sensex has important resistances at 83,700 and 84,300, which can be tested in a month or two. The price action thereafter will need a close watch. Failure to breach 84,300 and a reversal consequently can drag the Sensex down to 81,000 initially. A fall below 81,000 can be bearish to see 77,500-77,000 on the downside.
For now, we can allow for a rise to 83,700 and 84,300 and then wait and watch what happens.
Dow Jones (41,175.08)
The Dow Jones Industrial Average has surged and closed on a strong note above 41,000 last week. The index touched a high of 41,207.92 on Friday before closing at 41,175.08, up 1.27 per cent for the week.
Outlook: The strong close above 41,000 is very bullish. Support is at 40,900. The Dow Jones can rise to 41,900-42,000 in the short term. A break above 42,000 can take it further up to 42,300. From a big picture, if the Dow Jones makes a decisive break above 42,000, then it may have potential to target even 44,000 on the upside in the coming months.