Breach above 22,500 on Nifty will reignite bullish sentiment: Expert

Nifty weekly outlook: Amid a blend of optimistic global cues and domestic challenges, Indian benchmark indices navigated through a week marked by volatility and mixed sentiment. Despite grappling with disappointing earnings reports from the banking and non-banking finance sectors, alongside regulatory uncertainties, markets managed to eke out gains, albeit modest ones.

Domestic Landscape: Earnings and Regulatory Headwinds

The Indian indices faced pressure from a string of lacklustre earnings releases, particularly from the banking and NBFC sectors. Notably, Kotak Mahindra Bank endured a significant tumble, registering its worst week in nearly four years following regulatory actions imposed by the central bank. The ban on new digital clients and credit card issuances cast a shadow over the bank's performance, contributing to market jitters, said Arvinder Singh Nanda, senior vice president, of Master Capital Services

Technical Analysis: Nifty and Bank Nifty

Nifty maintaining ground above the critical level of 22,500 will be challenging. A Dark Cloud Cover pattern on the daily chart hinted at a potential bearish reversal, with immediate support seen at 22,300. However, further downside towards the 22,000 mark remains a possibility if current levels fail to hold. Conversely, breaching the 22,500 threshold could reignite bullish sentiment, Nanda said.

Meanwhile, the Bank Nifty witnessed a lack of sustained buying interest, accompanied by a divergence in momentum indicators, signalling a potential consolidation phase. The key level of 47,500 garners significant attention, with 48,000 acting as a crucial resistance barrier. A breach below 48,000 could precipitate further downside, with levels around 47,500 to 47,250 or the 50-day simple moving average coming into focus, Nanda added.

Global Context: Positive Momentum

On the global front, optimism prevailed as US and UK indices closed the week on a strong note. Easing geopolitical tensions in the Middle East, coupled with positive earnings reports from tech giants like Google and Microsoft, fuelled market optimism. Noteworthy gains were observed in major US indices, with the FTSE reaching an all-time high at 8146.

Looking ahead, market sentiment will likely hinge on a slew of domestic and global economic data. Key factors include Fiscal Deficit data, Infrastructure Output, and Company Q4FY24 results, alongside international indicators such as China's Manufacturing PMI and the Euro Zone's CPI. Additionally, the Fed's Interest Rate Decision will be closely monitored for its impact on global markets.