Nifty 50, Sensex and the Nifty Bank indices were knocked down badly last week. All the three indices were down over 2 per cent each. Our view of seeing a rise to 24,000 on the Nifty and the case of a bullish double bottom formation on the Nifty Bank index was proven wrong.
Continuing foreign money outflows, fear of an escalation in the trade war on the back of the tariffs that is being levied by the US are all weighing on the market. Although the sentiment is highly negative now, charts indicate that the sell-off could be coming close to an end. A strong long-term support is coming up for the benchmark indices that can halt the fall. From a long-term perspective, the Indian markets are getting ready to give a very good buying opportunity in the coming days. So, as the Nifty falls further from here, do not panic, consider that as a good buying opportunity.
All sectoral indices also ended in red last week. The BSE Realty index was beaten down the most. It was down 9.39 per cent. This was followed by the BSE Healthcare and BSE Consumer Durables indices, which were down 7.56 per cent and 7.40 per cent, respectively.
Non-stop selling
The Foreign Portfolio Investors (FPIs) continue with their relentless selling. The equity segment saw an outflow of $1.6 billion last week. For the month of February, the FPIs have pulled out about $2.44 billion from Indian equities.
Video Credit: Businessline
Nifty 50 (22,929.25)
Nifty was under pressure since the beginning of week. It failed to sustain above the support at 23,285 mentioned last week. The index fell sharply breaking below this support and touched a low of 22,774.85. It closed the week at 22,929.25, down 2.68 per cent.
Short-term view: Price action on the daily chart indicates that Nifty is getting bought below 22,800. Support is at 22,800-22,700. If Nifty manages to sustain above this support, it can rise back to 23,400-23,500 again.
Such a rise will give an early sign of a double bottom formation on the daily chart. A break above 23,500 will then clear the way for a rise to 24,000 in the short term.
In case Nifty breaks below 22,700, a fall to 22,500-22,300 can be seen.
Chart Source: MetaStock
Medium-term view: We reiterate that the broad 22,500-22,000 region is a strong support zone where the current fall can halt. We expect the Nifty to see a strong rise either from current levels itself or after a fall to 22,500-22,000. That leg of rally will take the Nifty up to 25,000-26,000 initially, and then to 28,000-28,500 eventually this year.
So, we stress again that a further fall from here should be considered as a good buying opportunity from a long-term perspective.
Nifty Bank (49,099.45)
Nifty Bank index failed to sustain above 50,000 and fell last week. This has negated the case of the double bottom formation indicated last week. The index has closed the week at 49,099.45, down 2.11 per cent.
Short-term view: The immediate outlook is unclear. The index is getting support near 48,700 now. However, a sustained rise above 50,000 is needed to ease the downside pressure. A rise above 50,000 and a subsequent break above 51,000 are needed to turn the outlook bullish. If that happens, the Nifty Bank index can rise to 52,000-53,000 in the short term.
But if the index continues to stay below 50,000, a fall to 48,000 or 47,000 can be seen. After this fall, the index can rise back to 50,000 again.
Chart Source: MetaStock
Medium-term view: Immediate support is at 48,000. Below that, 47,000-46,600 is the next strong support zone. A fall beyond 46,600 is less likely. We expect the Nifty Bank index to reverse higher from around 46,600 and rise back to 52,000-54,000 again. An eventual break above 54,000 will boost the bullish momentum and can take the Nifty Bank index up to 58,000 this year.
Sensex (75,939.21)
Sensex fell sharply breaking below the support at 76,900. It made a low of 75,388.39 and has closed the week at 75,939.21, down 2.47 per cent.
Short-term view: Sensex is getting support near 75,400. Resistance is around 77,100. If the Sensex manages to rise and breach 77,100 from here, then the the near-term outlook will turn positive. Such a break can take the index up to 78,700-79,000.
On the other hand, if Sensex declines below 75,400, a fall to 74,000 can be seen.
Chart Source: MetaStock
Medium-term view: The region around 74,000 is a strong support. We expect the Sensex to sustain above it. In case the index declines below 74,000, the downside can extend to 72,000.
From a long-term perspective, Sensex can see a reversal either from 74,000 itself or after an extended fall to 72,000. That reversal will have the potential to take the index up to 80,000 again. An eventual break above 80,000 will then clear the way for the Sensex to target 90,000 and higher this year.
Dow Jones (44,546.08)
The Dow Jones Industrial Average has been stuck inside a range for some time now. The index has been oscillating between 43,880 and 45,050 over the last three weeks. Within this range, the index has closed the week at 44,546.80, up 0.55 per cent.
Chart Source: MetaStock
Outlook: The immediate outlook is unclear. A breakout on either side of 43,880 or 45,050 will decide the next move.
A break above 45,050 and a subsequent rise above 45,100 will be bullish. It can take the Dow Jones up to 45,500-45,600 in the short term.
On the other hand, if the index declines below 43,880, it can fall to 43,600 or 43,400 this week.
Long-term supports
Nifty Bank: 48,000-46,600
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