1 week Ago
The Indian benchmark indices opened the week with a wide gap-up last week following the Maharashtra election results . But, the indices failed to get a strong follow-through rise after that. The Sensex, Nifty 50 and the Nifty Bank indices were stuck inside a narrow range all-through last week.
That has left the near-term outlook unclear for the benchmark indices. There are chances of seeing a gap-down open on Monday following the weak GDP data that was released on Friday. However, we will have to see if the indices continue to remain lower or can bounce back again.
Overall, the near-term picture is unclear. We will have to wait and watch the price action for some time to get clarity on the next direction of move. The Foreign Portfolio Investors (FPIs) turned net buyers of Indian equities last week.
They bought about $586 million in the equity segment last week. However, for the month of November, there has been a net outflow of $2.56 billion.
We will have to wait and see if the FPIs are increasing their purchase quantum. If that happens, then it can support the Nifty and Sensex to move higher from here. Nifty opened the week on a positive note with a wide gap-up.
However, it failed to get a strong follow-through buying after that for a sustained rise above 24,350. The sharp fall below 24,000 on Thursday to a low of 23,873.35 increased the threat of a fresh fall.
However, the bounce-back on Friday has provided relief. Nifty has closed the week at 24,131.10, up 0.
94 per cent. Short-term view: The short-term outlook is unclear. Immediate support is at 23,850 and resistance is at 24,350.
Beyond these levels, 23,650 and 24,550-24,700 are the wider support and resistance respectively. So, 23,850-24,350 (narrow) or 23,650-24,700 (broad) can be the possible trading ranges for the Nifty now. A breakout on either side of 23,650 or 24,700 will determine the next move.
A break above 24,700 will be bullish for a rise to 25,000 and even higher. On the other hand, a break below 23,650 can drag the Nifty down to 23,300 and 23,000. Medium-term view: Failure to rise above 24,700 can continue to keep the danger of seeing one more fall to 23,000 and lower.
However, as mentioned last week, cluster of supports are in the 23,000-22,000 region. So, the fall to 23,000-22,000 can be a good buying opportunity from a long-term perspective. A fresh rise from the 23,000-22,000 region can take the Nifty up to 27,000 and higher next year.
In case, the Nifty manages to breach 24,700 from here, then the aforementioned rally can happen without seeing another fall to 23,000-22,000. Nifty Bank index broke the range above 52,600 but did not sustain. The index touched a high of 52,760.
20 on Thursday and then fell sharply shedding most of the gains. Nifty Bank index has closed the week at 52,055.60, up 1.
8 per cent. Short-term view: For now, the 49,800-52,600 range is still intact. Intermediate support within the range is in the 51,600-51,500 region.
A break below 51,500 can take the Nifty Bank index down to 50,000 and 49,800, the lower end of the range again this week. In that case, the 49,800-52,600 range will continue to remain intact for some more time A sustained rise above 52,600 is needed to become bullish. Only then a rise to 54,000 and higher levels will come into the picture.
In case, the index declines below 49,800, a fall to 49,500-49,000 is possible. Medium-term view: There is no change in the big picture. The broader bullish view remains intact.
Strong support is in the 49,000-48,000 region. Nifty Bank index has potential to see a rise to 57,000-58,000 over the medium term. So, dips to 50,000 and lower can be considered as a good buying opportunity from a long-term perspective.
The bullish view will go wrong only if the index breaks below 48,000. Such a break, though less likely, can drag the Nifty Bank index down to 46,500-46,000. Sensex failed to breach 80,500 last week and fell sharply to a low of 78,918.
92 on Thursday. However, it has recovered slightly from this low and has closed the week at 79,802.79, up 0.
87 per cent. Short-term view: Near-term picture is unclear. Immediate support is at 78,900.
A break below it can take the Sensex down to 77,700-77,600. Resistance is at 80,500 which has to be broken to see a rise to 80,900 or 81,100. If Sensex manages to breach 81,100, then an extended rise to 82,000 is possible.
Broadly, 77,600-81,100 can be the possible trading range for now. A breakout on either side of this range will then determine the next move. Medium-term view: As long as the Sensex stays below 81,000, the danger of the fall to 75,500-75,000 will linger.
As mentioned last week, a strong break above 81,000 is needed to negate the fall. However, a fall to 75,500-75,000 can be a very good buying opportunity. Sensex can see a fresh rally from the 75,500-75,000 region targeting 80,000 first and 85,000 eventually over the long term.
The rise to 44,900 happened last week in line with our expectation. The Dow Jones Industrial Average touched a new high of 45,071.29 before closing the week at 44,910.
65, up 1.39 per cent. Outlook: From a big picture, 45,000 is a very strong resistance on the charts.
So, the price action this week will need a close watch. Failure to get a sustained rise above 45,000 can be bearish. So, a reversal from here and a subsequent fall below 44,500 can drag the Dow down to 43,500-43,000 initially.
A break below 43,000 will trigger an extended fall to 42,000-41,000 eventually. In case, the Dow manages to breach 45,000 decisively, that would be very bullish to see 49,000 and higher levels. We will have to wait and watch.
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