Nifty 50, Sensex and Nifty Bank index began the week on a volatile note and closed lower on Tuesday. The markets were closed on Monday on account of a public holiday. The gradual rise from Wednesday has aided the benchmark indices to recover some of the loss.
This recovery seems to lack strength. On the charts, the broader picture remains weak. Resistances are there to cap the upside. As such, any further rise from here can be short-lived. We expect the Nifty, Sensex and Nifty Bank index to see more fall going forward.
FPIs Sell
The Foreign Portfolio Investors (FPIs) sold Indian equities for the third consecutive week. The equity segment saw a net outflow of about $817 million. The net outflow for the month of September now stands at $2.2 billion.
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Nifty 50 (23,346.40)
Short-term view: Immediate resistance is at 23,500 which can be tested this week. Failure to breach this hurdle can drag the Nifty down to 23,100-23,000. That in turn will keep alive the danger of breaking below 23,000. Such a break can drag the index further lower.
In case the Nifty manages to rise past 23,500 from here, a relief rise to 23,900-24,000 is a possibility. Such a move can reduce the danger of declining below 23,000, but will not completely negate that.
Medium-term view: As mentioned last week, Nifty can fall towards the lower end of its broad 22,000-26,500 range. So, the expected break below 23,000 mentioned above can drag the Nifty down to 22,600-22,500 initially and even lower thereafter.
However, there is no change in our long-term bullish view. We expect the Nifty to retain its 22,000-26,500 sideways range. As such a bounce from around 22,500 or 22,000 can take the index higher towards 26,500, the upper end of the range in the medium term.
A bullish breakout above 26,500 will then bring into the picture the chances of the long-term rally to 28,000-30,000.
The bullish view will go wrong only if the Nifty declines below 22,000.
Nifty Bank (56,358.70)
Short-term view: Immediate resistance is at 56,600. A break above it can trigger a relief rise to 57,500 or even 57,800. A rise beyond 57,800 might not be easy. It will need some strong positive trigger.
A reversal either from 56,600 itself or from around 57,800 can drag the index down to 55,600, an important support. An eventual break below 55,600 can then take the Nifty Bank index down to 55,000 and lower.
Medium-term view: The break below 55,600 and the fall to 55,000 will be bearish to see 54,000-53,700 on the downside. Failure to get a sustained bounce thereafter will increase the danger of seeing 51,000-50,000 on the downside.
From a long-term perspective, 51,000-50,000 is a very strong support zone. As long as the Nifty Bank index stays above this support zone, the overall bullish view will remain intact. So, we retain our bullish view to see 65,000 and 68,000-69,000 on the upside in the long term. A strong rise above 60,000 will clear the way for this rally.
Sensex (74,294.96)
Short-term view: Key resistances are at 74,800 and 75,500. The downside remains open to see 73,400. A break below it can drag the Sensex down to 71,500.
A strong rise above 75,500 is needed to get some breather. Only then a rise to 76,000 and higher levels can be seen. We expect the upside to be capped at 75,500 for now.
Medium-term view: The broader 71,000-86,000 range is intact. Within that, the Sensex is likely to go down towards the lower end of the range in the coming weeks. We expect the Sensex to bounce back from the 71,500-71,000 region and go back up to 75,000 and 80,000 in the coming months.
Eventually, we expect the index to make a bullish breakout above 86,000 and go up to 90,000 and 94,000 in the long term.
This bullish view will go wrong only if the Sensex breaks below 71,000. That would need some strong and new negative trigger.
Nifty Midcap 150 (22,901.85)
The fall to the 22,200-22,000 support zone happened as expected last week. The Nifty Midcap 150 index touched a low of 22,101 and then has risen back very well from there. If this bounce sustains and a strong follow-through rise happens from here, then 23,200-23,300 can be seen. It will also keep the upside open to see 23,800-24,000.
In case, the index falls back below 22,700 from here, then 22,500-22,000 can be seen again.
The long-term bullish view remains intact. The upside remains open to see 26,000-26,500 and even 28,000 in the long term. A strong break above 24,000 will clear the way for this rally.
Nifty Smallcap 250 (18,287.40)
The strong fall breaking below 18,000 that was seen initially last week did not sustain. The Nifty Smallcap 250 index fell to a low of 17,524,40 and then bounced back sharply recovering most of the loss.
The sharp bounce-back move indicates the presence of strong buyers at lower levels. That in turn keeps intact our overall bullish view.
As long as the index stays above 18,000, a rise to 18,600-18,700 is possible in a week or two. That in turn will keep the doors open to see a rally to 22,500-23,000 and 24,000-24,500 in the long term.
The region around 17,400 is a very crucial support. The Nifty Smallcap 250 index will come under more selling pressure only if it declines below this support.
In that case, the rally to 23,000-24,500 mentioned above will be delayed but will not get negated.
