Nifty Outlook: Indices stagnate

Nifty 50, Sensex and the Nifty Bank index came down slightly last week. The benchmark indices were down in the range of 0.4-0.85 per cent for the week. However, this has not altered the broader structure on the charts. The bias continues to remain positive. Supports are there to limit the downside for all three indices. We expect the benchmark indices to sustain above their support and rise back going forward.

The Foreign Portfolio Investors (FPIs) bought Indian equities for the fourth consecutive week. The equity segment saw a net inflow of about $388.63 million. The FPI action in the coming weeks will need a close watch. If they continue to buy, then that could be a very good positive sign for the Indian markets from a long-term perspective.

Short-term view: Nifty has found support around 24,250 last week. Near-term resistance is around 24,500. If Nifty manages to sustain above 24,250 and breaks above 24,500, then that would ease the downside pressure. Such a break can take the index higher to 24,750-24,800 in the coming weeks. An eventual break above 24,800 will then clear the way for a rise to 25,200-25,400.

In case the index declines below 24,250 from here, a fall to 24,000-23,950 can be seen, but not beyond that. After this fall, Nifty can rise back towards 24,500 and higher again.

Medium-term view: The broader 22,000-26,500 range remains intact. The expected break above 24,800 can take the index up towards the upper end of this range. The bias continues to remain positive to see a bullish breakout above 26,500. Such a break can take the Nifty up to 28,000 and 30,000 in the long term.

To negate this bullish view, Nifty must break 22,000. But that looks less likely now. It will need some strong and new negative trigger.

Short-term view: The index remained lower but stable all through the week. Key support is in the 57,000-56,700 region. A dip to test this support zone this week cannot be ruled out. However, a fall below 56,700 is less likely.

Nifty Bank index can rise to 59,000-60,000 in the short term. This rise can happen either from here itself or after a dip to 57,000-56,700.

The short-term picture will turn negative only if the index breaks below 56,700. If that happens, a fall to 56,000 can be seen.

Medium-term view: The overall bullish view is intact. The upmove can gain momentum on a break above 60,000. That in turn can take the Nifty Bank index up to 65,000 in the medium term and 68,000-69,000 in the long term.

As mentioned last week, series of supports are there at 55,000, 53,000 and 50,000. Our bullish view will go wrong only on a break above 50,000.

Short-term view: The price action last week indicates that the Sensex is getting fresh buyers around 77,500. If it manages to get a strong follow-through rise from here, then 78,800-79,000 can be seen this week. It will also keep the upside open to see 80,000 and 82,000 in the short term.