Nifty 50 Prediction for the week: Supports can cushion the fall

Last week, the Nifty 50 index, along with the Sensex and Nifty Bank index, witnessed a significant decline of over 2 percent each, causing market apprehension. However, these indices have been range-bound recently and have essential support levels that are likely to cap the downward trend. The Nifty Bank index, in particular, has crucial support near the current levels.

As long as the benchmark indices remain above these support levels, the broader positive outlook remains intact, and there is no immediate danger of a further decline.

Foreign Portfolio Investors (FPIs) have recently shown a shift in their strategy, ending their three-week selling spree and investing approximately $426 million in the equity segment last week. This buying activity could potentially support the Sensex and Nifty to rise higher. Over the month of October, the net outflow stands at $4.99 billion.

In the short term, the Nifty struggles to rise above 23,200 but gets strong buying support around 22,300. The near-term support is at 22,300-22,250, followed by 22,100 and 21,800 as the next important support levels. The Nifty is expected to sustain above 22,100, and in the short term, the trading range is projected to be 22,100-23,200.

However, the index will face danger only if it breaks below 21,800, leading to a potential fall to 21,500 and lower levels.

Similarly, in the medium term, the broad range of 22,000-26,500 remains intact. Despite the recent fall, it is anticipated that the Nifty may breach 23,200 and rise towards 23,800 and 24,000. The only significant danger in this outlook is if the Nifty falls below 21,800, which could result in a decline to 21,500 and even lower levels. Over the long term, the Nifty is likely to breach 26,500 and rise to 28,000 and 30,000. Our bullish view will only be incorrect if the Nifty declines below 21,800.

Moving on to the Nifty Bank index, it has experienced a sharp decline contrary to expectations of a rise to 56,700. The immediate support is in the 54,000-53,800 region, which has held well so far. The index may rise to 57,000 in the coming weeks but could face more selling pressure if it breaks below 53,800, leading to a potential fall to 53,000-52,800.

This decline could keep the downside open to 52,000 and even 51,000. In the medium term, the crucial support level of 51,000 exists, which, as long as it remains intact, will not change our broader bullish outlook. The Nifty Bank index could rise to 60,000-61,000 over the medium term, with a potential upside target of 68,000-69,000 long-term. The index must decline below 51,000 for our bullish view to be invalidated.

Lastly, the Sensex has faced resistance around 74,800 in recent weeks, leaving a downside possibility of 71,500-71,300. A fall below 71,000 could pressure the index, leading to levels below 70,750 and even lower. The medium-term range is projected to be 71,000-86,000, with a potential bounce from around 71,300 and a rise to 75,000 confirming the range.

The long-term outlook remains bullish, with the possibility of the Sensex breaching 86,000 and rallying to 90,000 and 94,000. The crucial support level at 69,800 must be closely watched below 71,000, as a decline below this point would invalidate our long-term bullish view.