Week Ahead

The BSE Sensex gained 0.3 percent to close at 72,832 and the Nifty 50 rose 0.3 percent to 22,097, while the broader markets rebounded after severe corrections in the previous week, as the Nifty Midcap 100 index was up 1.3 percent and Smallcap 100 index climbed 1.4 percent.

The recovery in Indian markets dared a selling spree of foreign institutional investors (FIIs). The market was cautious in the first half of the week ahead of the FOMC meet outcome, but the mood turned in favour of bulls after the US Federal Reserve raised the economic growth forecast for CY24 to 2.1 percent from 1.4 percent earlier, and maintained interest rates in 5.25-5.5 percent range, indicating three rate cuts this calendar year despite inflation above its long-term target of 2 percent.

In the truncated week ahead, the market is expected to be rangebound and volatile given the monthly derivative contracts expiry, and the volume may be a bit low due to couple of holidays, experts said, adding the focus would be on the US GDP numbers.

Technically, the Nifty 50 may remain rangebound unless it decisively breaks 22,200 on the higher side, with immediate support at 21,950 and key support at 21,700 level. The index has formed bullish candlestick pattern with long lower shadow on the weekly scale, indicating buying interest at lower levels, after long bear candle in previous week, but still consistently holding 10-week EMA (21,950) on closing basis.

As long as the support level of 21,700 holds, a buy-on-dips stance is advisable. However, a breach of 21,700 could potentially lead the index towards the 21,600 – 21,500 range.

On the upside, the levels of 22,200 – 22,450 are anticipated to pose strong resistance in the coming week.

The monthly options data indicates that 21,900-21,800 is expected to be support area for the Nifty 50, with hurdle on the higher side at 22,100-22,300 zone, followed by 22,500 mark.