WINTER IS HERE AS NIFTY IS HEADED TOWARDS 21500 LACK OF BUYING INTEREST IS THE CULPRIT

Dated: 01/03/2025

Bears continued to have pressurized selling in the broader markets as investors / traders continued to feel the pain with no relief of any pull back. Nifty lost another 670 points last week to give a close at 22124.70 loosing almost 2.90% with no immediate sign of relief seen so far. As the February month has officially been closed Nifty so far has lost almost 1383.7 points in this month as compared to its previous monthly closing of 23508.40 delivering the losing streak after almost 28years where consecutively 5 months negative closing has been delivered by Nifty.

Nifty has almost corrected 15.87% so far from the ATH in September 2024 of 26277.35 to now finally making low’s of 22104.85 to give a close at 22124.70 in February 2025. As we are now ahead of cool off below 22500-22600 we may now find the heaven near to 21287-21500 kind of levels in the coming weeks ahead. As by the time Nifty touches 21287-21500 range the overall correction would be almost 19% (near to 20% from ATH). These levels could now act as soft-core levels where the ongoing panic could possibly stop & another line of consolidation & bottom formation phase could start where in the next 2 months time could be consumed. However, the potential expected upside from the lower levels could possibly be 22500 followed by 23100-23150 range meanwhile major trend reversal could now only be possible if Nifty sustains above 23800-23850 kind of levels.

The intensity of turmoil doesn’t seem to be easing one rather putting huge mental pressure as well as financial pressure on the investor’s portfolio. Despite major relief on the fundamental grounds by the government this mayhem is not willing to stop anytime soon. The Indian Equity markets have gained many recent news items where major of the news items are mentioned below:

1. Repo rate cut of 25bps by RBI followed by possible further rate cut in April quarter of 25bps

2. Liquidity infusion of Rs.2.5 Lacs cr. by RBI

3. Easing up of Dollar index below 107

4. India-US tie-up on certain items for long term trade relations, etc.

5. GST collection hit another milestone of Rs.1.84 lacs crore in February risen by 9.1%.

6. MSCI rebalancing held on 28^th February 2025.

It has been filled with lots of news let it been domestic or international & mainly positive one which has been supporting the markets but few factors which now holds on the hope for a stronger momentum ahead are:

1. Weaker Rupee but RBI buying bonds from OMO on Feb 20^th could support Rupee

2. Poor Q2 & but now Q3 earnings of major companies are showing positive results.

3. Slowdown in the Indian growth rate in 3 quarters of FY 2024-25 but projection of RBI for the FY 2025-26 seems in line.

In all these flow’s one thing remained consistent where FII’s continued to remain on the Net sell side & doesn’t seem to stop anywhere near now but the intensity of selling initially reduced but again it has increased significantly. FII’s have been in no mercy for the Indian domestic Equity markets as their relentless selling has been nonstop where since the beginning of the October 2024 month FII’s have done massive selling amounting to Rs. 3,23,765 crore combined of October, November, December, January & February 2025 so far. This has lead the entire pressure on the Indian Domestic Equity Markets overall FII’s have sold nearly Rs. 3 Lacs cr. in the Calendar year 2024 & so far in 2025 1.46 lac crore while on the contrary DII’s were the main supporters of the entire Indian domestic Equity Markets with whopping buying of Rs. 3,37,378.30 cr. since the beginning of October 2024 & in the Calendar year 2024 they have bought more than Rs. 5.26 Lacs cr. & Rs. 1.51 lac crore so far in 2025.

However, since the Nifty’s Multi-Year crucial support levels of 22500-22600 has now been broken on monthly closing basis with continuous delivering the losing streak after almost 28years where consecutively 5 months negative closing has been delivered by Nifty. On the other side FII’s net longs stands @15-17% & which resembles near to the historic low of net long positions by the FII’s. Which continuously signifies & has now possible bottom formation somewhere near 21287-21500 which indeed has turned the game & bottom was formed in Nifty. Now we expect the FII’s long positions to rise towards 24%, 48% & followed by 67% in the coming months ahead which may take Nifty & broader markets again on the higher levels.

In the wholesome broader markets witnessed some key events & their outcomes last week which are described as follows:

Domestic News (Mainly consists of Union Budget 2025-26 Outcomes):

• GST collection hit another milestone of Rs.1.84 lacs crore in February risen by 9.1%.

• Repo rate cut of 25bps by RBI followed by possible further rate cut in April quarter of 25bps

• Liquidity infusion of Rs.2.5 Lacs cr. by RBI

• Possibility of Import duty on EV Vehicles reducing to as much as 15% from earlier 110%.

• LIC took Rs.84,000 crore hit in their portfolio amid market turmoil

• The Reserve Bank of India (RBI) reduced its benchmark interest rate by 0.25 percentage points to 6.25%, marking the first cut in nearly five years.

• Liquidity infusion of Rs.2.5 Lacs cr. by RBI

• India-US tie-up on certain items for long term trade relations, etc.

• Direct Tax Code has been introduced replacing the old Income Tax Act 1961.

International news:

• New Coronavirus With Potential To Cause Pandemic Discovered In China – Daily Mail

• Easing up of Dollar index below 107

• UK Financial Sector Faces Competitive Threats

• UK Foreign Ministry Announces £100 Million Development Finance Initiative

• At the COP29 climate conference, discussions emphasized the need to reform global financial structures to effectively address the climate crisis. The conference highlighted the significant climate finance gap, especially for emerging markets requiring $2.4 trillion annually by 2030 for climate investments.

• Russia-Ukraine in talks to settle down their disagreements & end the war soon

In the institutional segment the FII’s remained negative with net sell of Rs. 22,011.38 cr. but here DII’s have been the buyer’s with Rs. 22,252.17 cr. last week. FII’s have been brutal but history has shown whenever FII’s have shown merciless selling pressure we somehow make another bottom supported by DII’s massive buying as monthly retail SIP data surpassed Rs.26,000 cr. p.m. remains stagnant.

Nifty last week remained sideways initially but eventually on the last day of the week bears hammered hard to kill the Nifty downwards with net loss of 670.30 points i.e. 2.90% loss almost. Nifty has almost corrected 15.87% so far from the ATH in September 2024 of 26277.35 to now finally making low’s of 22104.85 to give a close at 22124.70 in February 2025. As we are now ahead of cool off below 22500-22600 we may now find the heaven near to 21287-21500 kind of levels in the coming weeks ahead. As by the time Nifty touches 21287-21500 range the overall correction would be almost 19% (near to 20% from ATH). These levels could now act as soft-core levels where the ongoing panic could possibly stop & another line of consolidation & bottom formation phase could start where in the next 2 months time could be consumed. However, the potential expected upside from the lower levels could possibly be 22500 followed by 23100-23150 range meanwhile major trend reversal could now only be possible if Nifty sustains above 23800-23850 kind of levels. The support from Banking space & Reliance Industries may continue to flourish in coming weeks as well.

Sensex too remained into the grips of bears with loss of almost 2112.90 i.e. 2.81% almost to give a close at 73198.10. The crucial support have breached 75000 & below this could trigger a downward move towards 70000-71000 kind of levels which could also be considered as crucial support levels while on the upside from those levels 75000-77000 cold now remain as an immediate target zones. The support from Banking space & Reliance Industries may continue to flourish in coming weeks as well.

In Bank Nifty the overall trend has been sideways to slightly positive so the crucial support still remains within the pre-defined range of 47500-47800 kind of levels & any breach below this could trigger a downward move towards 45000 kind of levels while on the upside the potential levels remains at 50000 & major trend reversal on a close above 51500 kind of levels. Unlike earlier times major potential upside could be supported by Private Banks forming HDFC Bank & Kotak Banks etc.

In the Nifty Financial Services the crucial supports now remains at 22000-22850 kind of levels while the potential up move could get us 24000 kinds of levels.

In “Nifty IT we have broken the major crucial zones of 40000-40500 & tested lower zones of 37000-38000 as earlier mentioned but nevertheless these selling pressure may continue to exert in the coming weeks as well where lower end levels of 36000 could be tested while from those levels the potential upside could be towards 40000 kind of levels but the caution is warranted in this sector.

Till October 2024 the number of Demat Accounts has risen to whopping 20cr. this not only helps the capital markets directly but also directly to Equity investments.

The monthly SIP in Indian markets now rose at Rs. 26,000 cr. per month.

 

Brief Levels of Nifty / Sensex/ Bank Nifty / Nifty Financials / Nifty IT:

Nifty CMP:  22127.70
Nifty Potential Upside Target: 22500 / 23100-23150 / 23800-23850 (As the case may be)
Nifty Immediate Target / Support: 21500

Sensex CMP: 73198.10
Sensex Potential Upside Target: 75000 / 77000 (As the case may be)
Sensex Immediate Target / Support: 70000-71000

Bank Nifty CMP:  48344.70
Bank Nifty Hurdle / Immediate Target: 50000 / 51000-51500 (As the case may be)
Bank Nifty Immediate Crucial Support: 47500-47800 / 45000 (As the case may be)

Nifty Financial CMP: 23174.35
Nifty Financial Crucial Target: 24000
Nifty Financial Crucial Support: 22000-22700

Nifty IT CMP: 37318.30
Nifty IT Potential Upside Target: 40000
Nifty IT Immediate Target / Support: 36000

Stock on Radar:

Large Caps:

 

• Voltas (CMP 1320): Recently IMD has reported one of the biggest heat waves in India in this summer starting from this March 2025 itself. This stock looks hot this time & can be added at CMP 1320 with strict SL placed at 1180 for an estimated possible target of 1560 in 3months time frame.

• Amber Enterprises (CMP 5628): Another benefit of heat wave could be this counter & can be accumulated here at CMP 5628 with SL placed at 5200 for a potential upside target of 7000 in 3 months time frame.

• Berger Paints CMP 488): Berger Paints is likely to be removed from FnO segment soon in coming months looks like a good upside candidate but can be added on decline towards 460-465 with strict SL placed at 430 for a estimated possible target of 600 within 3 months time frame.

• Hindustan Unilever Limited (CMP 2190): This large cap FMCG counter looks a safe haven in this volatility & can be added here at CMP 2190 with strict SL placed at 2100 for a potential upside towards 2500 in 3 months time frame.

Mid-Cap:

• Map My India (CMP 1664): This mid-cap counter is direct rival of Google maps in India. Looks good to add here at CMP 1664 with strict SL placed at 1500 one can expect a potential upside towards 2000 in market stabilizes in coming months ahead.

About the Author:

Mr. Vishal Gupta a SEBI Registered Research Analyst is the founder of “VG STOCK RESEARCH”, founder of “THE ANALYSIS ROOM”, a writer & an advisor having rich experience in Indian Equity Markets who has spent years comprehending an industry wide shift and risk management with more than 12+ years exploring in depth analysis of the Equity & Derivatives with accuracy of 90% and above.

He has also been into teaching Fundamental Analysis for quite some time giving investors/traders comprehensive knowledge & skills of Indian Equity Markets.

Email I’d: contact@vgstockresearch.com
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