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The Indian stock market indices, Sensex and Nifty 50, have demonstrated a strong rebound from their lows last week, exhibiting renewed bullish momentum. Both indices closed the week with gains of about 1%, effectively mitigating the potential for a corrective fall that had been anticipated. This positive development maintains the broader uptrend in the market. However, the Nifty Bank index continues to lag behind, registering a decline of approximately 2% last week. Despite this underperformance, the Nifty Bank index has managed to bounce back from a crucial support level. A robust follow-through rise from this point is crucial for the index to regain its bullish momentum.
Analyzing sector performance, the BSE Realty and BSE Bankex were the only two sectors that ended the week in the red, with declines of 1.69% and 2.54%, respectively. In contrast, the BSE Power and BSE Healthcare indices outperformed, surging by 5.53% and 5.30% respectively. The foreign portfolio investors (FPIs) played a significant role in driving the market's performance. Despite some selling in the latter half of the week, FPIs remained net buyers of Indian equities, injecting $349 million into the equity segment. This inflow continues a trend observed throughout July, with a total net inflow of approximately $4 billion. This sustained foreign investment influx is likely to fuel further gains for the Sensex and Nifty 50 in the future, potentially pushing them to new highs.
A closer look at the Nifty 50 index reveals that it traded lower for most of the week before experiencing a sharp surge on Friday, wiping out all the losses accumulated throughout the week. The index closed at 24,835.85, representing a 1.24% gain for the week. The short-term outlook for Nifty 50 is bullish, with immediate support levels identified at 24,650, 24,400, and 24,200. The index is expected to rise to 25,200-25,300 this week. However, an intermediate correction towards 25,000-24,700 from around 25,300 cannot be ruled out. Ultimately, a decisive break above 25,300 could propel the Nifty 50 to the 26,000-26,100 range in the short term. The short-term outlook will turn bearish only if the Nifty breaks below 24,200, which could lead to a potential decline to 23,700. However, such a scenario appears unlikely at this time.
The medium-term outlook for Nifty 50 remains bullish with the broader uptrend intact. The region between 23,700 and 23,500 now constitutes a robust support zone. As long as the index stays above this support, the bullish sentiment will persist. The Nifty 50 has the potential to rise to 27,150 this quarter and even 27,900 in the following quarter if the rally extends. Intermediate resistances are expected at 26,300 and 26,800. The upward trajectory would be negated only if the Nifty declines below 23,500, a scenario that appears less likely at this point. However, such a break could potentially drag the Nifty down to 22,500 and below. Turning our attention to the Nifty Bank index, we observe that it breached the 52,000-53,000 range on the downside, triggering a decline that tested the support level of 50,500. The Nifty Bank index hit a low of 50,438.30 before rebounding and recovering some of the lost ground. It ended the week at 51,295.95, down 1.86%.
Source: Index Outlook: Nifty 50 & Sensex regain bullish momentum