Nifty’s support levels – 24000 for the next rally till 29200 OR just a False Base?
Nifty, India’s flagship stock market index, has always been a significant benchmark for investors, analysts, and traders alike. Currently, it is hovering around a key of Nifty’s support levels – 24000. However, many market enthusiasts are buzzing with the big question: Is this a building block that lays the foundation for a new rally towards 29,900 or just a false base that could potentially crumble under pressure?
As traders navigate through global uncertainties and shifting sentiments, the stakes are high. A bounce from this support could signal a strong bullish momentum, while a breakdown could indicate deeper correction. But before we examine some of the factors that could influence this scenario, let’s have a look at how the Indian stock market has been performing recently.
Recent Performance of Indian Stock Markets
The Indian stock market, after reaching its record highs earlier this year, is currently experiencing a persistent selling pressure. Following a period of consolidation, the market has now entered a correction phase, indicating a shift in investor sentiment. Analysts identify Nifty’s immediate support level at 23,500 with further support levels around 23,300-23,600, while resistance levels are seen at 23,800 and stronger resistance around 23,850.
From a technical aspect, a doji candle pattern was formed near Nifty’s 200-day Exponential Moving Average (DEMA), indicating market indecision. In spite of a short-term bearish outlook, Nifty could see a pullback rally if it stays above the 23,500 level.
Meanwhile, Bank Nifty closed positively at 50,180, with key support around 49,900, holding above this level might spark a rally towards 50,500-50,600. It also successfully defended the 200-Day Exponential Moving Average (DEMA), indicating strength. So, despite the current downward pressure, if Bank Nifty stays above 49,900 level, it retains the potential for a pullback.
The Nifty Options market is showcasing a significant concentration of open interest at 23,500-24,00 for Call and 23,500-23,000 Put levels. Its Put-Call ratio stands at 0.71, indicating a cautious market. The option market continues to show weakness both from a medium-term outlook and in terms of momentum.
In addition to this, the Indian markets have underperformed compared to their global peers, grappling with both slowing macroeconomic trends and weaker-than-anticipated microeconomic fundamentals. Furthermore, the Q2FY25 earnings season has revealed more disappointments than successes, highlighting challenges across various sectors.
Key Factors that Might Affect influence Next Week’s Stock Market
Assembly Elections
On account of the Maharashtra assembly elections on 20th Wednesday,2024 the Indian stock market will remain shut. The results for the same will be declared on Saturday, November 23rd, 2024. D-street experts believe that the elections will play a crucial role in determining the market’s direction this week.
New IPOs and Listings to hit D-street
This week, D-street is abuzz with excitement as several new IPOs such as NTPC Green Energy IPO and other fresh listings as set to make their debut. These offerings could draw significant attention from retail and institutional investors, looking out to diversify their portfolio. Market participants are closely analysing the financials, valuations and growth prospects of these companies to gauge their impact on the broader market. As these listings roll out, they are expected to add vibrancy to the trading sessions and could influence market sentiment in the near term.
FII Activity
As the earnings season concludes, the focus shifts back the foreign institutional investor flows. Over the past one and a half month, FIIs have consistently been on a selling spree, offloading ~₹1.4 lakh crore in the cash market. Thus, contributing towards market pressure. Domestic institutional investors, on the other hand, have maintained their support by purchasing ₹26,255 crore in November.
However, given the volatility and the selling pressure from FIIs, investors may be cautious and will likely wait for signs of stabilization before increasing stock exposure or investing in any sector that is impacted by the sell-off.
Foreign portfolio investors (FPIs) continued their strong selling trend in Indian markets during the first half of this month, driven by the rising US dollar and Us bond yields. This uptrend was largely fuelled by Republican Donald Trump’s victory in the US presidential election and the recent decision by the US Federal Reserve to cut interest rates.
Global Cues
Key global economic indicators – such as US bond yields, the performance of US Dollar index, US unemployment claims, flash manufacturing, service PMI figures and Japan’s inflation data will play an important role in influencing market trends. Additionally, investors will assess any potential effects on Wall Street or the US Dollar stemming from announcements by US President-elect Donald Trump.
What Should Investors Do?
Given the mixed signals, here are a few ways you can navigate through these turbulent waters:
- Diversify your portfolio: It’s always wise to spread your investments across sectors to mitigate risks. Consider a mix of defensive stocks in sectors such as FMCG and utilities or growth stocks like IT sector stocks and banking stocks.
- Keep an eye on global cues: Global market movements, particularly in the US and China, can significantly impact Indian markets. Stay updated on macroeconomic indicators like interest rate decisions, inflation reports and geopolitical developments.
- Adopt a wait and watch approach: If you are unsure about the current market levels, wait for a clear trend to emerge. Look for strong confirmations before making substantial bets.
- Consider Systematic Investment Plans: For long-term investors, continuing with SIPs can be a good strategy to average out the market’s volatility.
Conclusion
As of now, Nifty is at a critical juncture. The 24,000 level is shaping up to be an important support that could set the stage for a rally towards 29,200 if broader economic and technical conditions remain favourable. However, the risk of a false base remains, given the global uncertainties and potential domestic challenges. For now, it may be wise to exercise caution, closely monitor market developments, and make informed decisions based on your risk appetite and investment horizon. Want to know more about where to invest in the stock market? Download the Jarvis App today and gain expert insights from the best equity advisory in India to help guide your decisions.