Nifty 50 and Sensex Surge as Market Rally Gains Momentum: Key Levels to Watch

On September 21, 2024, the stock markets witnessed a significant rally as the Nifty 50 and Sensex surged, continuing the positive momentum seen in the previous week. Despite some intermittent corrections, the overall sentiment in the market remains bullish. The Nifty Bank index, in particular, outperformed the broader indices, recording a steady upward movement throughout the week.

This upward trend has been further supported by the recent 50-basis point rate cut by the US Federal Reserve, which has positively impacted investor sentiment. The Fed’s projection of another 50-basis point cut before the end of the year is expected to maintain a favorable outlook for equity markets, providing sustained momentum to both Sensex and Nifty 50.

Market Performance Overview

During the week leading up to September 21, 2024, the Nifty 50 index broke past key resistance levels, closing at 25,790.95, marking a 1.71% increase. Meanwhile, the Sensex also performed well, surpassing expected levels and closing at 84,544.31, up by 1.99%. Among sectoral indices, the BSE Realty index led the pack, gaining 4.67%, while the BSE IT index saw a decline of 2.83%.

The robust performance of the Nifty Bank index, which surged over 3%, highlights the market’s underlying strength. The index outperformed both the Nifty 50 and Sensex, reflecting the growing confidence in the financial sector.

Foreign Portfolio Investors (FPIs) Continue Buying

A key driver of this rally has been the continued inflow of foreign portfolio investments (FPIs). Last week alone, FPIs invested $696 million in the equity market, bringing the total net inflows for September to $4 billion. This steady influx of foreign capital is likely to support further gains in the Nifty 50 and Sensex, potentially pushing both indices to new record highs in the coming weeks.

Nifty 50 Outlook

The Nifty 50 index’s sharp rise last week saw it break through the resistance level of 25,470, reaching a new high of 25,849.25 before closing at 25,790.95. The outlook for the week of September 23-27, 2024, remains bullish, with the index expected to test the 25,900-25,950 resistance zone. A decisive break above 25,950 could push the Nifty 50 higher, potentially reaching 26,100-26,200 levels.

Support for the index is currently located in the 25,550-25,500 region, which is expected to act as a cushion in case of any pullback. However, if the index falls below this support level, the 25,200-25,000 zone will provide strong short-term support.

For the medium term, the broader uptrend remains intact, with the Nifty 50 expected to target 27,150 or even 27,900, provided it stays above the critical support zone of 24,000-23,800. Traders should be cautious as the index approaches the 27,000 level, as a reversal could trigger a correction back to the 26,000-25,000 range.

Nifty Bank Outlook

The Nifty Bank index outperformed expectations last week, rising to a high of 54,066.10 before closing at 53,793.20, up by 3.57%. The short-term outlook for the index remains bullish, with the potential to test the resistance at 54,600 in the coming week. If the index fails to breach this level on its first attempt, a corrective pullback could bring the index down to 53,000-52,800. However, a fall below 52,800 is considered unlikely at this point.

In the event of a successful breach of the 54,600 resistance, the Nifty Bank index could rally further, targeting 55,500-55,700 in the short term. From a medium-term perspective, the bullish trend remains strong, with the index likely to reach 56,500-57,000 in the coming months. However, traders should be aware of potential intermediate resistance levels at 54,600-54,800 and 55,700, which could trigger corrections before the index moves higher.

Sensex Outlook

The Sensex continued its upward trajectory last week, closing at 84,544.31 after making a high of 84,694.46. This represents a 1.99% gain for the week. In the short term, the outlook remains positive, with the index likely to test the 85,500-85,600 resistance zone. A failure to breach 85,600 could trigger a corrective decline to 83,500-83,400. However, a fresh rally from these levels could see the Sensex rise to 87,000-87,500 in the coming weeks.

The short-term outlook for the Sensex will turn bearish only if the index falls below 82,000, which could potentially drag it down to 80,000. However, this scenario appears less likely given the current market momentum.

In the medium term, the Sensex remains bullish as long as it stays above the 80,000-80,500 support zone. The index could target 88,000-89,000 in the coming months, although traders should remain cautious as the index approaches these levels. This resistance zone coincides with the 27,150-27,900 resistance levels for the Nifty 50, suggesting that a reversal could occur at these points.

Dow Jones Outlook

The Dow Jones Industrial Average also saw strong gains last week, closing at 42,063.36 after making a new high of 42,160.91. The outlook for the Dow remains bullish, with immediate support levels at 41,900 and 41,650. As long as the index holds above these supports, the bias remains positive, with the potential to break through the 42,250-42,300 resistance zone.

A successful breach of this resistance could see the Dow Jones rise to 42,800-42,900 in the short term. In the medium term, the index could target 44,000-44,500, although a correction is expected after reaching these levels.

Conclusion

The overall market outlook remains bullish, with key indices such as Nifty 50, Nifty Bank, and Sensex showing strong upward momentum. The recent rate cut by the US Federal Reserve and continued FPI inflows are expected to support this rally in the near term. However, traders should remain cautious as the indices approach key resistance levels, which could trigger corrections.

In the coming weeks, the market will likely continue to test higher levels, with Nifty 50 targeting 26,100-26,200, Nifty Bank aiming for 55,500-55,700, and Sensex poised to reach 87,000-87,500.