Index Outlook: Staying firmly bullish

Throughout the week, the Nifty 50 and Sensex maintained higher and stable levels, despite the anticipated corrective decline not materialising. The Nifty Bank index, however, experienced a sharp rise for the second consecutive week, surpassing the anticipated level of 61,000 much faster than expected. The Indian benchmark indices are expected to continue their upward trajectory from this point.

Any brief pull-back would likely be short-lived, with strong support in place to limit downside. Foreign Portfolio Investors (FPIs) have continued to purchase Indian equities for the fourth consecutive week, with a strong influx in the past two weeks alone. This trend could potentially propel the Sensex and Nifty towards new highs in the coming months.

In the short term, a support level exists between 24,950 and 24,900, capable of curbing any potential downside if Nifty dips from its current position. As long as Nifty remains above 24,900, the positive bias will persist. Nifty is projected to rise to 25,850-26,000, with a potential delay in reaching 26,000 if the index breaks below 24,900, first testing 24,750 or 24,500 before a subsequent rise to 25,000 and beyond.

Should the index fail to break above 26,500, the broader range of 22,000-26,500 is expected to remain intact, with a potential decline to 25,000 or lower.

On a medium-term outlook, the broader range of 22,000-26,500 remains intact, with Nifty heading towards the upper end of this range. A test of 26,500 is likely in the medium term, and the index may breach this level eventually, subsequently moving towards 28,000 and 30,000 in the long term. Conversely, if Nifty fails to break above 26,500, the broader range may persist, with a potential fall to 25,000 or lower. Nifty must decline below 22,000 for our long-term bullish outlook to be disproven.

In the short term, the broader uptrend for Sensex continues, with the recent rise strengthening the case for a quicker rally towards 68,000-69,000 in the long term. Key support is located between 57,000 and 56,000, with Nifty Bank index expected to stay above 56,000. A strong trigger might be needed to break below 56,000, and 51,000-50,000 is a robust support zone. A decline below 50,000 would be highly unlikely at present.

On a medium-term note, the 71,000-86,000 range remains intact for Sensex, with the index expected to move towards the upper end of this range, potentially reaching 86,000. If this occurs, Sensex could surge higher, reaching 90,000 initially and 94,000 in the long term. However, failure to surpass 86,000 may keep the broader range sideways, dragging the index down to 80,000 or lower.

Sensex needs to fall below 71,000 to negate our long-term bullish stance. The index maintained its position above 22,000 for the third consecutive week, preserving the broader bullish outlook. Immediate resistance is at 22,820, which has held firm thus far. If Sensex fails to break above this level, a corrective fall to 22,450 or 22,000 could be expected in the short term.

Nonetheless, a decline beyond 22,000 appears unlikely. A break above 22,820 may lead to higher gains for Nifty Midcap 150 index, with a potential rise to 23,700 and 24,400 in the short term, paving the way for a longer-term rally to 28,000. Sensex's rise to 18,000 aligns with our expectations, with resistance at 18,050 holding steady.

A dip from this point may test levels of 17,800 or 17,600, while 17,000 serves as a strong support, likely limiting downside. Our bullish outlook remains intact, with Sensex only facing pressure if it breaks below 17,000, potentially leading to 16,000 or even 15,000 on the downside.