The bellwether indices — Nifty and Sensex — extended their gains and continue to rule at new highs, backed by strong rally in the bank as well as mid and small-cap segment. The healthcare sector stocks also contributed to last week’s rally.

Global events dominated market moves last week. While the Fed held rates steady, President Donald Trump nominated Jerome Powell as new Fed Chair.

This move was in line with market expectation and is likely to support the ongoing bull-run in equities. Rate hike of 50 bps by the Bank of England was also construed as a positive for stock markets.

Nifty 50 (10,452)

After a minor pause at around 10,350, the Nifty index surpassed this hurdle last Wednesday and subsequently closed the week at record high.

Short-term trend: The index has been in a short-term uptrend since taking support at the September low of 9,687. It hovers well above its 21- and 50-day moving averages.

The daily as well as weekly relative strength indices have entered the overbought levels of above 70, indicating that a near-term correction is possible.

Moreover, there is a decrease in daily volume over the past five trading sessions while the index is rallying higher. The indicators and oscillators in the weekly chart show a mixed picture. The index was choppy and formed a hanging man candlestick, a near-term bearish reversal pattern on Friday.

Therefore, the index could witness selling pressure, going forward, and a sudden slump is possible. The Nifty mid and small-cap indices also feature in the overbought territory, signifying caution ahead. Traders with short-term perspective should tread with caution and stick to trailing stop-loss.

The index has a key support in the band between 10,300 and 10,350.

An emphatic tumble below this base zone can pull the index down to 10,200 or even to 10,100 levels in the short term.

If the index extends the current uptrend and breaches the significant resistance level of 10,500, it can push northwards to 10,544 and 10,600 in the short term.

A decisive plunge below 10,000-mark is needed to alter the uptrend and drag the index down to 9,900 and 9,700-9,750 band.

Medium-term trend: The index is in a medium-term uptrend as well. It has experienced strong rally over the past two weeks and now faces a key resistance ahead at 10,500 and 10,544. Only an emphatic break above these resistances can pave way for the index to trend upwards to 10,921 over the medium-to-long term.

On the other hand, a conclusive decline below the significant medium-term support zone between 9,700 and 9,750 will be a risk to the medium-term uptrend. Subsequent key supports for the index are pegged at 9,500 and 9,300 levels.

Nifty Bank (25,650.7)

Yet another 3.3 per cent rally was witnessed in the Bank Nifty, backed by strong rally in both the PSU bank and private bank stocks. The index advanced 811 points or 3.3 per cent, decisively breaching a key hurdle at 25,200 and has closed at record high last week.

The short-term trend is up for the index. It can extend the uptrend and test resistance at 25,800 and 26,000 levels in the short term. Traders with a short-term horizon with long positions should trail with a fixed stop-loss. Fresh long positions can be initiated with a stop-loss at 25,350 levels.

On the downside, if the index declines below 25,300, a fall to 25,200 and 25,000 can’t be ruled out. In that scenario, traders should avoid taking fresh long positions. Conclusive fall below 25,000 can pull the index down to 24,700 and 24,500 in the short term.

Sensex (33,685.5)

Last week, the Sensex added 528 points or 1.6 per cent and continued scaling to new highs. After a minor pause at 33,300, the index exceeded this level with a strong rally.

However, it is at overbought levels, implying that a near-term corrective decline is on the cards, as the daily indicators and oscillators feature in the overbought territory.

Any downward reversal and a corrective from the current levels can pull the index to 33,500 and 33,300 in the near term. Next key supports are placed at 33,000, 32,650 and 32,400 levels. On the upside, continuation of the uptrend can take the index higher to 33,729 and 35,000 in the short to medium term.

That said, the short-term uptrend will be mitigated if the index plunged below the key support at 32,400. Selling interest will then be witnessed that can drag the index lower to 32,000 and 31,700.

Global cues

The Dow Jones Industrial Average climbed another 105 points or 0.45 per cent to close at 23,539 last week. Nevertheless, the index now tests a resistance at 23,500. An emphatic break above this barrier is required to take the index higher to 24,000 in the medium term, with a minor pause at around 23,750.

The daily indicators display negative divergence, implying near-term trend reversal. If the index fails to decisively rally beyond 23,500, it can decline to 23,300 and 23,200 levels. Strong decline below 23,200 can pull the index down to 23,000.

The Nikkei 225 emphatically breached the key resistance level of 22,000 and accelerated to multi-year highs last week. It rose 530 points to close at 22,539.

The index tests next resistance at 22,500 now. Next resistances are at 22,600 and 22,700. Supports to note are placed at 22,200 and 22,000.

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