The US, China tariffs took effect last week; the US stocks posted weekly gains. But the Shanghai Composite Index tumbled 3.5 per cent last week, the seventh consecutive weekly loss in a row. The movement of the global markets and the after-effects of the trade war can provide direction to the Asian and domestic markets. The first quarter results announcement will start this week, which could keep the markets choppy. Also, macro-data such as consumer price inflation, IIP data and trade balance data releases need a close watch.

Nifty 50 (10,772.6)

The Nifty index was volatile the previous week as well and, in the midst of choppiness, it managed to advance 58 points or 0.54 per cent. The index tests a key resistance at 10,800.

Short-term trend: The index continues to be in a short-term uptrend since the low formed at around 9,950 in March this year. The corrective up-move from the key support level of 10,550 is gathering strength, as the index managed to surpass its 50-day moving average recently. However, it tests its 21-day moving average and a significant resistance at 10,800, which has been limiting the uptrend since early May. The bias is bullish this time and the possibility of the index breaking above this barrier is higher now. Such a breach can take the index to the subsequent resistance in the band between 10,900 and 10,930. A conclusive upward breakthrough of this hurdle will reinforce the short-term uptrend and accelerate the index higher to 11,000 and 11,100 in the short term.

The indicators and oscillators in the daily chart display mixed clues, but the weekly chart shows an upward preference. Traders with a short-term perspective can take long positions on a strong rally beyond 10,800 levels with a fixed stop-loss. On the other hand, any corrective decline can find support at the immediate support level of 10,600 initially. A decisive plunge below this level will deteriorate the uptrend and drag the index down to the subsequent support level at 10,550, 10,420 and 10,350. The index needs to conclusively fall below 10,350 level to change the short-term uptrend. Ensuing supports are at 10,250 and 10,100 levels for the index.

Medium-term trend: The broad sideways movement between 10,400 and 10,900 is intact for the index. Last week also, it moved within this range. The medium-term trend will remain indecisive as long as the index continues to remain range-bound. We reiterate that a convincing break-out on either side of the aforementioned sideways range will indicate the direction of the next move. A strong move beyond 10,900 will reinforce the uptrend and take the index northwards to 11,000 and 11,200 levels in the medium term. However, a break below the lower boundary at 10,400 will bring back selling pressure and pull the index lower to 10,200 and 10,000.

Sensex (35,657.8)

Last week, the Sensex gained 234 points or 0.66 per cent despite choppiness. Nevertheless, the index tests a short-term significant resistance at 35,800, which has been limiting the upside over the past few weeks. Moreover, the range between 35,800 and 36,000 is also a critical resistance band. Inability to surpass this resistance band can keep the index under pressure for a while, and any corrective fall thereafter can take support at 35,200 and 35,000 levels. An emphatic upward breakthrough of 36,000 can push the index higher to 36,200 in the short term. Conversely, a plunge below the significant support range of 34,800 and 35,000 will weaken the uptrend and drag the index down to 34,500 levels. The next base level is pegged at 34,300.

Medium-term trend: The Sensex has been range-bound over the past three months. The index currently tests a vital resistance at 35,500 and a decisive move above this level can take it higher to 36,000 levels in the ensuing weeks. Further rally beyond 36,000 can accelerate the index to 36,200 and 36,400 levels. Conversely, only a decisive tumble below the significant medium-term support level at 34,000 can bring back selling pressure and pull the index lower to 33,400 levels in the medium term.

Nifty Bank (26,493.8)

The Bank Nifty climbed 129 points or 0.5 per cent in line with the bellwether indices last week, amid volatility. Now, the index tests a resistance at 26,500 levels as well as its 21-day moving average. A decisive break-out of this level will pave the way for an up-move to 27,000 in the short term. The daily and weekly relative strength indices are charting upwards in the neutral region. The daily price rate of change indicator has entered the positive territory implying buying interest.

A corrective decline can take cushion from the immediate supports placed at 26,200 and 26,000 levels.

But a conclusive fall below 26,000 can be a threat to the uptrend that has been in place since March low of 23,605 levels. In that scenario, the index can resume its decline and test next key support in the band between 25,500 and 25,600 in the short-to-medium term.

Hence, traders with a short-term view should tread with caution and go long on a conclusive move beyond 26,500 levels. Initial target will be 27,000.

Further rally beyond the hurdle will reinforce the uptrend and push the index higher to 27,500 and then to 28,000 in the medium term.

Global cues

The Nikkei 225 index tumbled 516 points or 2.3 per cent last week to close at 21,788 and tests supports at 21,500. A strong fall below this base level can drag the index down to 21,200 and 21,000 levels. Key resistances are at 22,000 and 22,300 levels.

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