Benchmark indices Sensex and Nifty50 were under heavy selling pressure last week, plunging more than 5% each, and negative global cues also increased pressure.
However, this week is very important to the market, as Monday’s budget announcement can destabilize the index. Other events, such as January car sales data and the RBI policy conference, need to be carefully monitored, apart from the volatile global market.
Nifty 50 (13,634.6)
Nifty 50 began truncating last week with a slightly positive note, but then began to decline on the back of the sale of interest. The index plummeted 737 points (5.13 percent) last week, ultimately breaking the 14,000 key psychological foundation. This level can now act as an important barrier.
last week: The continued decline in Nifty 50 retraced more than 50% of the short-term uptrend Fibonacci retracement level, which began at a low of 13,131 in late December. This means that the downtrend starting from the recently registered record high of 14,753.5 is intensifying. Well below the immediate support level of 13,500, the index drops to 13,200 and in the short term to 13,000.
The Daily Relative Strength Index (RSI) may go from the neutral zone to the bear area, and the weekly RSI may be modified from the overbought area and go from the bull zone to the neutral zone. What’s more, the daily indicators of rate of change are hovering in the negative territory, suggesting selling interest.
In other words, the short-term uptrend, which started at the low of 10,790 in September 2020, will be maintained as long as the index is trading above the 12,750 level. A strong downward break below this level changes the trend and drags the index to 12,400, 12,260, and 12,000.
Conversely, rallies above the immediate resistance level of 13,820 can lead to pullback rallies, raising the index to 14,000. Beyond this barrier, the index can rise to the 14,280 level and then to the 14,600 level. The next major resistances are the 14600 and 14,750 levels in the short term. After that, the resistances are 14,800 and 14,900.
Medium-term outlook: The sharp drop last week began to weaken the mid- to mid-term upward trend that had continued since March last year. The index recently broke through the main base level of 14,000 and is currently trading above the next base level of 13,500.
A plunge under this support could lower the index to the 13,000 level. Subsequent major medium-term support is 12,430, followed by 12,000. Significant medium-term resistance above the 14,000 level is 14,500, 14,750, and 15,000.
Last week, the Sensex extended its recent fall, plunging 2,592, or 5.3%, and eventually below the main thresholds of 48,000 and 47,000. The index has been suspended above the next support level of 46,000.
Below this level, the index can drop to 45,550. We reaffirm that the short-term upward trend that began in September last year will continue as long as the index trades above the key support level of 45,000.
Key support less than 45,000 is placed at 44,520, then at 44,000.
On the other hand, a strong rise above the 46,800 key barrier could push the index to 47,000 and then to the 47,400 level. A strong rise over these resistances could raise the index to the 48,000 and 48,500 levels in the short term. Subsequent resistors are placed at the 49,000 and 49,520 levels. Investors with a long-term view can consider booking a partial profit at this junction and continue to invest with a stop loss of 39,800.
Nifty Bank (30,565.5)
In the midst of volatility, Nifty Bank restricted the downside, surpassing last week’s Bellweather Index. It fell 601 points (1.9%) last week.
That said, the index is currently testing key support at 30,000. Emphatic consonants under this bass could be reduced to 29,500 and then to 29,000 in the coming weeks. A final fall below the major short-term base level of 29,000 poses a threat to the short-term uptrend that has occurred since the September low of 20,400 last year. In that case, the index could drop to 28,500 and then to the 28,000 level.
However, if the index exceeds immediate resistance at 30,850 and 30,900 levels, it could move northward to 31,500 levels and then to 32,000 levels in the short term. Subsequent resistance is at the 32,500 and 32,800 levels.
Further rises above the 32,800-33,000 band will rise to 33,500 and may rise to 34,000 in the medium term. Traders need to be careful as the index tests key support at around 30,000. Only when the index falls below the 30,000 level can you start a new short position with a tight stop loss.
Index Outlook | Sensex, Nifty 50 Pauses on Important Bases
https://www.thehindubusinessline.com/portfolio/technical-analysis/index-outlook-sensex-nifty-50-paused-above-crucial-base/article33704899.ece Index Outlook | Sensex, Nifty 50 Pauses on Important Bases