Taking positive cues from the US market, which is at a record high, and the positive trend in Asian markets, domestic indices can begin the week on an optimistic note.

Wholesale price inflation (WPI) slowed to an 11-month low of 0.9 per cent in June due to subdued food inflation and weak manufacturing prices. Lower inflation coupled with decline in IIP growth has led to renewed call for a rate cut by the RBI. This expectation could help stocks further.

However, June quarter results of blue-chip companies and rupee movement could lead to intra-day volatility. The oscillators feature featuring in the bullish zone, backing the upward momentum.

Nifty 50 (9,886.3)

The Nifty 50 index that encountered a key resistance at 9,700 in early June has emphatically breached it by gaining 2.3 per cent in the previous week.

Short-term trend: After a range-bound movement between 9,500 and 9,700 for more than a month, the Nifty index moved out of the range on a positive note. Amid volatility, the index surpassed 9,700 last Monday and extended its up-move thereafter. The sideways consolidation phase appears to be a base building process of Nifty. The index is now set to test the 10,000-mark in the ensuing weeks, but with a slight pause at current levels. The daily relative strength index has moved above 70 levels and is approaching the overbought territory, indicating the possibility of a near-term correction.

This corrective could be a sideways movement or the index can dip to test the immediate supports level of 9,800 and 9,700 before resuming northwards. The weekly indicators hover firmly in the positive territory, backing the uptrend.

The index trades well above its 21 and 50-day moving averages. Short-term trend will be under threat only if the index slumps below the key support level of 9,500. An emphatic downward break of 9,500 can drag the index lower to 9,400 or 9,328 in the short to medium term.

Key supports below 9,328 are at 9,200 and 9,100 levels. That said, continuation of the up-move can take the index higher to 9,939 and 10,000 in the short term. Traders can stay invested with a stop-loss at 9,700 levels.

Medium-term trend: The intermediate-term uptrend that started in December 2016 at a low of 7,893, has strengthened with the recent up-move.

Strong break above the psychological resistance level of 10,000 can take the index higher to 10,626 and 12,077 in the medium term.

Investors with a medium-term perspective can relax and stay invested as long as the index trades above the significant support level of 9,300. A decline below key medium-term support level of 9,500 will be an initial signal to become cautious. Next key supports below 9,300 are at 9,100 and 9,000.

Nifty Bank (23,937.7)

Last week, the Bank Nifty kept pace with the bellwether indices and rose 488 points or 2 per cent. While trending up, the index breached the immediate resistances at 23,500 and 23,740 levels. Now, these levels could act as crucial support for the index.

However, Bank Nifty faces a key resistance ahead at 24,000. Inability to surpass this hurdle can pull the index down to 23,740 and then to 23,500 levels.

Traders with a short-term view can hold their long positions with a stop-loss at 23,650 levels. Decisive break above 24,000 can keep the bullish momentum intact and take the index northwards to 24,500 and 25,000 in medium term.

On the other hand, a plunge below 23,500 will bring selling pressure and pull the index down to 22,700 and 22,500 in the short term. In that case, traders should desist from taking fresh long positions.

Sensex (32,020.7)

Last week, the Sensex jumped 660 points or 2.1 per cent, moving into the uncharted territory. The level of 31,500 could be the immediate base for the index. A dip below this level can take support at 31,000 in the near future.

With a minor pause at current resistance level of 32,000, the index has the potential to trend upwards to 32,335 and 32,500 in the short term. Strong supports below 31,000 are placed at 30,800 and 30,600-30,500 band. Significant medium-term supports are at the level of 30,000 and 29,500 levels.

Global cues

The Dow Jones Industrial Average advanced 223 points or 1 per cent last week, breaching the key resistance at 21,500, to close at 21,637.7 levels. This rally has strengthened the uptrend in the index, which can extend to 21,800 and 22,000 in the short to medium term. Key support at 21,500 and 21,300 can cushion the index in the downside. Next supports are at the levels of 21,200 and 21,000.

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