Index Outlook: Indices hold firm

Nifty 50, Sensex and Nifty Bank index witnessed a good recovery last week. As mentioned last week, Nifty and Sensex are stuck inside a range and the rise back move has happened well within it. Nifty Bank index on the other hand is holding very well above its key support.

Broadly, the bias continues to remain positive. We expect the Indian benchmark indices to break their immediate resistance and go higher in the coming weeks.

FPIs buy

The Foreign Portfolio Investors (FPIs) bought Indian equities for the second consecutive week. The quantum of purchase is also relatively higher. The equity segment saw a net inflow of about $1.39 billion. It is important to see if they continue to buy in the upcoming weeks as well.

Video Credit: Businessline

Nifty 50 (23,053.10)

Short-term view: The support at 22,300 mentioned last week continues to hold very well. Immediate resistance is at 23,150. Nifty can break this resistance and go up towards 23,300-23,350 in the near term. That in turn will clear the way for the Nifty to see 23,900 and even 24,400 in the short term.

Support is in the 22,400-22,300 region. A break below 22,300 is needed to go down towards 22,100 or 21,800, the next key support levels. Nifty will come under danger only if it breaks below 21,800. But that looks less likely.

Our preference is to see the Nifty sustaining above 22,300 and rise breaking above 23,150.

Medium-term view: There is no change in the big picture. The wide 22,000-26,500 range is intact. Within that, we see high chances for the Nifty to go up to 26,500 in the medium term. The rise to 24,400 mentioned above will clear the way for this rally.

The long-term picture is also positive. Nifty can ideally breach 26,500 and go higher to 28,000 and 30,000 in the long term.

Crucial support to watch is 21,800. Our bullish view will go wrong only if Nifty breaks below 21,800. But that looks less likely.

Nifty Bank (54,686.95)

Short-term view: The break below 53,800, an important support, did not sustain last week. Nifty Bank index touched a low of 53,626.15 and then has risen back very well from there.

The outlook is positive. Immediate resistance is around 55,350. A break above it can take the Nifty Bank index higher to 56,000 initially and then to 56,500-57,000 eventually.

A sustained break below 53,800 is needed to bring the index under pressure. If that happens, a fall to 52,600 can be seen initially. It will also keep the downside open to see 51,500-51,000 going forward. But such a fall looks less likely.

Medium-term view: The broader picture remains positive. A rise to 60,000-61,000 can be seen in the medium term. This rise will increase the potential for the Nifty Bank index to target 68,000-69,000 in the long term.

The level of 51,000 is a crucial support. Nifty Bank index has to decline below this support to negate our long-term bullish view.

Sensex (74,459.53)

Short-term view: Sensex is getting very good support in the 72,500-72,450 region. Resistance in the 74,800-75,000 can be tested this week. We see high chances for the index to breach 75,000 and extend the upside to 77,000.

Sensex has to decline below 72,450 to turn the near-term picture negative. If that happens, a fall to 71,000 can be seen.

Medium-term view: As long as the Sensex sustains above 71,000 there is no change in the broader bullish outlook. The 71,000-86,000 remains the broad trading range. We see good chances for the Sensex to go higher towards 86,000, the upper end of the range in the medium term. Eventually, we expect the index to breach 86,000 and go higher towards 90,000 and 94,000 in the long term.

The levels of 71,000 and 69,800 are crucial supports. Sensex has to break below 69,800 to become bearish and prove our bullish view wrong.

Nifty Midcap 150 (21,047.50)

The bounce last week has given some relief. The crucial support level of 20,400 mentioned last week has held very well. The Nifty Midcap 150 index made a low of 20,336 and has risen back well from there.

Immediate support is at 20,900. Resistances are at 21,280 and 21,440. We expect the index to sustain above 20,900 and breach 21,440 going forward. That in turn will clear the way for the rise to 21,900-22,000 in the short-term. This rise will keep the broader bullish view also intact to target 23,000-23,500 in the medium term.

Nifty Midcap 150 index has to get a sustained fall below 20,400 to go down towards 19,000. However, from a long-term perspective, such a fall will be a very good buying opportunity. As long as the Nifty Midcap 150 index remains above 19,000 the long-term outlook will remain positive. There is potential for the index to go up towards 26,000-26,500 and even 28,000 in the long term.

The index has to break 19,000 to negate this bullish view.

Nifty Smallcap 250 (16,764.55)

The 2 per cent rise last week looks like a corrective bounce as of now. Need to see if the index is getting strong follow-through buyers from here or not.

As mentioned last week, 17,300 is a crucial resistance. The index has to surpass this hurdle to get a breather and go further up towards 18,000.

But failure to rise above 17,300 from here will keep the downside open to see 15,500-15,000 in the coming weeks.

However, from a long-term perspective, this fall to 15,000 will be a very good buying opportunity. A fresh leg of rally from around 15,000 can take the Nifty Smallcap 250 index higher towards 18,000-18,500 in the medium term. An eventual break above 18,500 will then trigger a rally to 23,000 and even 24,500 in the long term.

As mentioned last week, the Nifty Smallcap 250 index has to decline below 14,000 to negate the long-term bullish outlook.

Immediate Resistance

Nifty 50: 23,150

Nifty Bank: 55,350