Holding steady

Last week, we had said that the Nifty 50 and Sensex are looking bullish with an inverted head and shoulder pattern formation. This pattern has failed. The sharp fall on Wednesday, after the US announced that the ceasefire was over, played the spoil sport.

Although the pattern has failed, the broader picture remains positive. The recovery towards the end of the week indicates the presence of buyers in the market at lower levels. The Sensex and Nifty which were down about 2 per cent mid-week have recovered and closed the week marginally lower by 0.25 per cent each. As such, the development on the US-Iran war front has not changed anything on our overall bullish outlook.

The Foreign Portfolio Investors (FPIs) continue to buy Indian equities. The equity segment saw a net inflow of about $1.59 billion in July so far. There has been an inflow of about $3 billion in the last four weeks. Are the FPIs coming back? We need to wait and watch. If the FPIs increase their pace of purchase, then the Sensex and Nifty can scale new highs in the coming months.

Short-term view: The support at 23,800 continues to hold well. That keeps the bias positive. Immediate resistance is at 24,350. A break above it can strengthen the momentum. Such a break can take the Nifty up to 24,800 in the short term.

Failure to breach 24,350 can drag the Nifty down to 24,000-23,900. In that case, Nifty can remain in a range of 23,800-24,350 for some time.

The short-term picture will turn negative only if the index declines below 23,800. If that happens, a fall to 23,500 and even lower can be seen.

Medium-term view: The broader 22,000-26,500 range is intact. Within that, Nifty is moving up and is expected to rise towards 26,500, the upper end of the range. A break above 24,800 will clear the way for this rise.

The long-term picture remains positive to get a bullish breakout above 26,500 eventually. Such a break can take the Nifty higher to 28,000 and even 30,000 in the long term.

Short-term view: Except for the high volatility, the Nifty Bank index oscillated well within its 56,500-58,900 range. The near-term picture continues to remain unclear. We have to wait for a breakout on either side of 56,500-58,900 to get clarity on the next move.

The bias is positive. So, we see higher chances for the index to breach 58,900 and rise to 60,500-61,500 in the short term.

The outlook will turn negative only if the index declines below 56,500. In that case, 56,000 or even 55,000 can be seen on the downside.

Medium-term view: The overall bullish picture is intact. Key resistance to watch will be 61,500. A break above it will clear the way for a rise to 65,000 in the medium term. From a long-term perspective, there is potential for the Nifty Bank index to target 68,000-69,000.