Nifty 50, Sensex and the Nifty Bank indices were stable and range-bound last week. This indicates a pause within the overall downtrend. The price action last week signals that the downtrend is still intact. The Indian benchmark indices can see one more leg of fall ahead of the Union Budget this week on Saturday (February 1, 2025).
However, on the charts, strong long-term trend line supports are coming up for the Nifty and Sensex which can halt the downtrend. We expect the indices to see a reversal after this fall and begin a fresh leg of rally. As such further decline from here is going to give us a very good buying opportunity from a long-term perspective.
Can the Union Budget give the necessary trigger for the much-awaited trend reversal? We will have to wait and watch.
Among the sectors, the BSE Realty index was beaten down badly last week. The index had tumbled over 9 per cent. The BSE IT index outperformed last week and was up 2.32 per cent.
More sell-off
The Foreign Portfolio Investors (FPIs) are continuing their selling spree. For the third consecutive week, the FPIs sold over $2 billion. The equity segment saw a net outflow of about $2.28 billion last week. For the month of January, there has been a net outflow of $7.43 billion. The FPIs have to start buying in order to aid the Sensex and Nifty to reverse higher.
Video Credit: BusinesslineNifty 50 (23,092.20)
Barring the short-lived dip to a low of 22,976.85, Nifty managed to sustain above 23,000 all through last week. The index has closed at 23,092.20, down 0.47 per cent.
Short-term view: The price action in the second half of the week indicates lack of strong buyers in the market. That continues to keep the near-term outlook negative. Nifty looks vulnerable to break 23,000 and fall to 22,800 initially. A further break below 22,800 can drag it down to 22,500-22,400.
This 22,500-22,400 region is a strong support zone where the current fall can halt. A reversal from this support zone can take the Nifty up to 23,500-24,000 again in the short-term.
In case Nifty breaks below 22,400, the downside can extend to 22,000.
Chart Source: MetaStock
Medium-term view: As mentioned last week, 22,500 and 22,400 is a strong long-term support where the current downtrend can halt. A reversal from around 22,400 can take the Nifty up to 25,000-26,000 initially. That will confirm the resumption of the long-term uptrend. This leg of upmove will have the potential to take the Nifty up to 28,000-28,500 this year.
As mentioned above, if Nifty declines below 22,400, an extended fall to 22,000 can be seen. The expected reversal can then happen from around 22,000.
So, reiterate that as the Nifty falls to 22,500, consider it as a good buying opportunity rather than becoming more bearish.
Nifty Bank (48,367.80)
Nifty Bank index was volatile in the first half of the week. However, broadly, the index continues to oscillate within the 48,000-50,000 range. The index has closed the week at 48,367.80, down 0.56 per cent.
Short-term view: The downtrend is intact. A crucial support is at 48,000. A decisive break below it can take the Nifty Bank index down to 47,200-47,000 first and to 46,600 eventually.
After this fall, we can expect the index to reverse higher. That reversal can take the Nifty Bank index up to 48,000-48,200 initially. An eventual break above 48,200 will then ease the downside pressure. It will then clear the way for a further rise to 49,000 and 50,000 in the short term.
Chart Source: MetaStock
Medium-term view: The level of 46,600 mentioned above is a strong support on the long-term chart. So, a bounce from there and a rise to 50,000 as mentioned above can mark the end of the current fall. A subsequent rise above 51,000 will turn the outlook bullish for revisiting 54,000 and higher levels going forward.
The index will come under pressure for more fall only if it breaks below 46,600. Such a break if seen will drag the Nifty Bank index down to 44,000 and even lower.
Sensex (76,190.46)
The struggle to get a sustained rise above 77,000 continued for the second consecutive week. Sensex has been broadly oscillating between 75,640 and 77,350 over the last couple of weeks. Within that, the index has closed at 76,190.46, down 0.56 per cent.
Short-term view: Sensex has a crucial support at 75,600 and 75,300. This can be tested in the near term. A break below 75,300 can drag the index down to 74,000 in the short-term.
We expect the Sensex to reverse higher from around 74,000. That leg of upmove can take the index up to 76,000-77,000 again.
Chart Source: MetaStock
Medium-term view: The region around 74,000 is a strong support. In case the Sensex breaks below 74,000, there can be an extended fall to 72,000. For, now we expect the downside to be limited to 72,000. Sensex can find a bottom either at 74,000 itself or at 72,000.
A rise from 74,000 or 72,000 and subsequent break above 80,000 will confirm the trend reversal. It will then take the Sensex up to 90,000 and higher this year.
Dow Jones (44,424.25)
The Dow Jones Industrial Average remained strong all-through last week. The index has surged well above 44,000. It touched 44,565.26 before closing the week at 44,424.25, up 2.15 per cent.
Chart Source: MetaStock
Outlook: The short-term trend is up and strong. Support is now in the 44,000-43,800 region. The Dow Jones can rise to 45,250 this week if the momentum sustains. A break above 45,250 can see an extended rise to 45,850.
The index will come under pressure for a fall only if it breaks below 43,800. In that case, a fall to 43,000 is possible.
Long-term supports
Nifty Bank: 47,000-46,600
