Index Outlook: Lifting hopes

Nifty 50, Sensex and Nifty Bank index opened the week with a wide gap-up last week. Thereafter they broadly stayed stable but higher all through the week. All the three indices were up over 1.5 per cent each last week. The US and Iran agreeing for a peace deal trigger this gap-up open last week.

On the charts, the picture is positive. Sensex and Nifty have resistance ahead. They are likely to breach this hurdle and move further higher. Nifty Bank index on the other hand can remain in range for some time. Eventually it is likely to make a bullish breakout of its range and go higher.

The Foreign Portfolio Investors (FPIs) snapped their eight-week selling spree. They bought $251 million in the equity segment. If they start to accelerate their purchase, then it can aid the Nifty and Sensex to gather bullish momentum. We will have to wait and watch.

Short-term view: The follow-through rise last week turns the picture positive. Support is in the 23,800-23,600 region. Resistance is at 24,250. Nifty can breach this hurdle and rise to 24,500 and 24,800 in the coming weeks.

The short-term picture will turn negative only if the Nifty declines below 23,600. If that happens, a fall to 23,300 and 23,000 can be seen again. But that looks less likely. The price action on the chart suggests that the Nifty can sustain very well above the 23,800-23,600 support zone.

Medium-term view: Nifty seems to have resumed its upmove within the broad 22,000-26,500 range. A break above 24,800 from here will clear the way for a rise towards 26,500 – the upper end of the range.

The overall picture continues to remain positive. As such we expect the Nifty to make a bullish breakout above 26,500 eventually in the coming months. Such a break can take the index higher to 28,000 and 30,000 in the long term.

The bullish view will go wrong only if the Nifty declines below 22,000. That looks less likely at the moment.

Short-term view: The break above 57,000 and the rise to 58,000 happened in line with our expectation. Last week’s candle indicates a kind of indecisiveness in the market.

Support is at 56,500 and resistance is at 58,800. Nifty Bank index can oscillate in a range of 56,500-58,800 for some time now. However, the bias remains positive. So, an eventual break above 58,800 can take the index higher to 60,500-61,000.

The index will come under pressure for a fall to 56,000 or 55,000 only if it declines below 56,500.

Medium-term view: The outlook remains bullish. Key resistance to watch will be the 60,500-61,000 region. A decisive break above 61,000 can boost the momentum. It can then take the Nifty Bank index up to 65,000 in the medium term. From a long-term perspective, the index has potential to target 68,000-69,000 on the upside.