Nifty 50 and Sensex continued their upward trajectory for the third consecutive week. The benchmark indices hit new highs last week and closed on a firmer note. Sustained buying at lower levels indicates the presence of strong buyers in the market. This keeps the overall bullish outlook in line. On the charts, both Sensex and Nifty 50 look firm. Going forward, we can expect the indices to rise further from here and make new highs.
On the other hand, the Nifty Bank index is not looking as strong as the Nifty. At the same time, it is not looking weak either. Hence, we can expect the Nifty to outperform the Nifty Bank index in the coming weeks.
Sectorally, the BSE IT index performed well last week, rising 3.87%.
Video credit: Businessline
Nifty 50 (25,235.90)
As expected, Nifty breached the resistance at 24,850 and surged above the psychological threshold of 25,000 last week. The index hit a fresh high of 25,268.35 before trailing slightly. It ended the week at 25,235.90, up 1.66%.
Short-term outlook: The outlook is bullish. Last week’s price action indicates the presence of strong buyers below 25,000. The area between 25,000 and 24,900 will now be a strong support. Nifty is likely to rise to 25,700-25,750 this week. There may then be a short-term corrective decline towards 25,200-25,000. However, the overall trend will continue to remain upwards.
In the short term, we expect the Nifty to resume upside from the 25,200-25,000 region and eventually cross 25,750.This uptrend could take the Nifty to 26,000-26,200 in the coming weeks.
The near-term outlook would turn negative only if the Nifty sinks below 24,900.While such a fall is unlikely, there is a chance the index could slide below 24,600.
Chart source: MetaStock
Medium-term outlook: The overall trend continues to be up. Strong support is found in the region of 24,000 to 23,850. As long as Nifty remains above this support, there is no threat to the current uptrend.
From here, Nifty may target 26,700-26,800 first. A break above 25,750 will pave the way for this upside. There may then be a corrective dip towards 26,000-25,800. But ultimately, Nifty could target 27,150 in the coming months. Price movement thereafter needs to be closely monitored. A sustained rise above 27,150 could see the index rise to 27,900 by the end of the year.
The levels of 27,150 and 27,900 are key resistances where the current uptrend may come to a halt. A reversal from either of these two levels could see Nifty slide towards 25,000-24,000 or even lower. Hence, one should start watching the market from the selling side as Nifty rises towards 27,150 or 27,900.
Nifty Bank (51,351)
The Nifty Bank index rose last week as expected to test the resistance at 51,400. It hit a record high of 51,466.55 before closing at 51,351, up 0.82 per cent.
Short-term outlook: On the weekly chart, the resistance of 51,400 is yet to be breached. But on the daily chart, the Nifty Bank index has risen well above the trend resistance level of 51,200.
Support is found in the range of 51,000 to 50,900. The immediate resistance is around 51,600. A break above this resistance could see the Nifty Bank index rise to 52,200-52,300 in the coming weeks. The upside potential could extend to 52,500.
The 50,650 level will be a key short-term support. If the index breaks below this support, the short-term outlook will turn negative. In that case, a fall to 50,100-50,000 or even 49,700 is possible in the short term.
Chart source: MetaStock
Medium-term outlook: Unlike the Nifty 50, the Nifty Bank index is not very bullish from a medium-term perspective as the outlook is unclear.
As previously mentioned, 52,650 (up from the previous level of 52,600) will be a key resistance to watch. The index needs to overcome this hurdle for the outlook to turn positive. Only then will a rise to 54,000 and above levels come into view.
Failure to breach 52,650 would leave the risk of a fall towards 49,000-48,000 initially. However, such a fall would present a very good buying opportunity. A fresh upswing from around 48,000 could take the Nifty Bank index towards 54,000 initially and eventually towards 57,000 in the medium term.
It is not immediately clear whether this rise will occur from here or after a drop to 49,000-48,000.
Sensex (82,365.77)
The Sensex index rose and closed last week well above 82,000. The index hit a high of 82,637.03 before closing the week at 82,365.77, up 1.58 per cent.
Short-term outlook: The outlook is bullish. Support is in the range of 81,700-81,600. Sensex may rise to 83,500 or 83,800 in a week or two. Thereafter, there may be a corrective decline to 82,200-82,000. However, the overall outlook remains bullish. Sensex may eventually breach 83,800 and rise to 84,000-84,300 in the coming weeks.
The near-term outlook would only turn bearish if the Sensex declines below 81,600, which could see a drop towards 80,500.
Chart source: MetaStock
Medium-term outlook: The 84,300 level is a key resistance level and if this hurdle cannot be breached, the Sensex may fall to 81,500-81,000 levels.
For the Sensex to continue its current uptrend, a strong rise above 84300 is needed.Hence, for now, one can allow a rise towards 84300 and closely monitor the price movement thereafter to get a clarity on the next move.
Viewing Support
Dow Jones (41,563.08)
The 40,900 support held firm as expected. The Dow Jones Industrial Average rose significantly after hitting a low of 40,842.29. The index ended the week on a strong note at 41,563.08, up 0.94%.
Chart source: MetaStock
Outlook: The bullish outlook remains positive. The immediate support is at 41,150. Below that, support is concentrated in the 40,800-40,500 area. The Dow Jones Industrial Average could rise to 42,000 this week.
A decisive breakout above 42,000 would gain bullish momentum. Such a breakout would likely push the index to 42,400 first, and also leave open the possibility that the Dow could eventually reach 42,800 in the coming weeks.
From a medium-term perspective, the Dow Jones Industrial Average could target a rise to 44,000 points in the coming months, but a sharp correction down thereafter is also possible.
