BEARS ATTACK HAVE NO MERCY! MAJOR WEAKNESS NOW ONLY BELOW 22500-22600 IN NIFTY!

Dated: 22/02/2025

Bear’s now have no mercy in regards to the bulls these days as Nifty last week continued its losing streak although with nominal losses but the portfolio’s went on in bleeding mode. Nifty made another low of 22720.30 to give a close at 22795.90 with loss of 133 points almost as compared to its subsequent weekly closing of 22929.35. Investors / traders left fizzled with no clue as what to do next in all these turmoil as their portfolio left to bleed in day light.

Despite the overall correction of nearly 13.50% in Nifty there is no point of relief seen in the index hampering which resulted in the panic across the board. However, Nifty seems to have its immediate crucial support within the pre-defined range of 22500-22600 any break below these levels cold give us a  further major breakdown towards 21500 kind of levels while on the upside the immediate hurdle could be seen at 23100-23150 range any breach above this could give us 23800-23850. 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.

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

Despite these many positive factors broader markets remained under pressure last week. This time Nifty is standing on last man standing within the defined levels of 22500-22600 as major weakness could prevail which could take Nifty towards the subdued levels of 21500 in the coming months ahead but till the time 22500-22600 is kept alive on the downside we still have hope for the revival from these levels. While on the upside the immediate hurdle could be seen at 23100-23150 range any breach above this could give us 23800-23850. Meanwhile major trend reversal could now only be possible if Nifty sustains above 23800-23850 kind of levels.

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 has subsequently reduced. . 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. 3,01,754 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 while on the contrary DII’s were the main supporters of the entire Indian domestic Equity Markets with whopping buying of Rs. 3,15,126.10 cr. since the beginning of October 2024 & in the Calendar year 2024 they have bought more than Rs. 5 Lacs cr.

However, since the Nifty’s Multi-Year crucial support levels of 22500-22600 have been working brilliantly so far but on the other side FII’s net longs stands 14.95% & which resembles near to the historic low of net long positions by the FII’s. Which continuously signifies & has formed the bottom formation somewhere near 22500-22600 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.

Recent Budget Highlights for the FY 2025-26:

Economic Growth Forecast:

• GDP growth for FY 2025-26 projected at 6.5%.

• Focus on inclusive growth, sustainable development, and economic recovery.

Fiscal Deficit Target:

• Fiscal deficit set at 5.8% of GDP for FY 2025-26.

Income Tax Reforms:

• Income tax slabs to be simplified, with higher exemptions for individuals.

• Focus on reducing the burden for middle-class taxpayers.

Infrastructure Investment:

• ₹15 lakh crore allocated for infrastructure, including roads, ports, railways, and airports.

• Strong push for smart cities and green infrastructure projects.

Agriculture and Rural Support:

• ₹2.5 lakh crore allocated for farmers’ welfare.

• Emphasis on doubling farmers’ income through better irrigation, organic farming, and crop insurance.

Health and Education:

• ₹2.5 lakh crore allocated for healthcare.

• Focus on improving healthcare in rural areas and expanding health insurance schemes.

• Increased allocation for education, including skill development and vocational training.

Green Energy and Sustainability:

• Introduction of a Green Energy Fund to boost renewable energy initiatives.

• Support for electric vehicles (EVs) and carbon-neutral technologies.

Support for MSMEs and Startups:

• Credit guarantee schemes for MSMEs (Micro, Small, and Medium Enterprises).

• Tax incentives for startups and ease of business regulations.

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):

• 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

• Rupee recovered towards 86.57 levels after RBI’s intervention & weakness in Dollar Index.

• 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

• Kash Patel took over as 9^th FBI Director

• 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. 7,793.27 cr. but here DII’s have been the buyer’s with Rs. 16,581.95 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 under pressure but closed with marginal loss of 133 points almost t give a close at 22795.90. The overall correction of nearly 13.50% in Nifty there is no point of relief seen in the index hampering which resulted in the panic across the board. However, Nifty seems to have its immediate crucial support within the pre-defined range of 22500-22600 any break below these levels cold give us a  further major breakdown towards 21500 kind of levels while on the upside the immediate hurdle could be seen at 23100-23150 range any breach above this could give us 23800-23850. 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 with marginal declined on Weekly basis with mere loss of nearly 600 points to give a close at 75311.06. The crucial support here too remained within the levels of 75000 as any breach below could trigger a downward move towards 70000-71000 kind of levels while on the upside 77000 could act as immediate hurdle while any move above could give us 79000 & any close on or above 79000-79200 could be considered as trend reversal on a longer time frame charts. 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 51000-51500 & major trend reversal on a close above these levels. Unlike earlier times major potential upside could be supported by PSU heavy weight banks like PNB, BOB & SBI etc.

In the Nifty Financial Services the crucial supports now remains at 22000-22700 kind of levels while the potential up move could get us 24000 kinds of levels.

In “Nifty IT” we remain intact for our earlier potential upside target of 44500-46000 kind of levels with crucial supports shifting higher within the defined range of 40000-40500 kind of levels. Any breach below 40000-40500 could trigger a downward move towards 37000-38000 kind of levels in the coming weeks ahead.The major move may once again be supported by heavy weights like TCS, Infosys & Wipro.

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:  22795.90
Nifty Hurdle / Immediate Target: 23100-23150 / 23800-23850 (As the case may be)
Nifty Immediate Crucial Support: 22500-22600 / 21500 (As the case may be)

Sensex CMP: 75311.06
Sensex Hurdle / Immediate Target: 77000 / 79000-79200 (As the case may be)
Sensex Immediate Crucial Support: 75000 / 70000-71000 (As the case may be)

Bank Nifty CMP:  48981.20
Bank Nifty Hurdle / Immediate Target: 51000-51500
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: 40544.55
Nifty IT Potential Upside: 44500-46000 (As the case may be)
Nifty IT Crucial Supports: 40000-40500 / 37000-38000 (As the case may be)

 

Stock on Radar:

Large Caps:

• Indusind Bank (CMP 1044): This large-cap private bank looks good to accumulate here at CMP 1044 with strict SL placed at 990 for a potential upside target of 1200 in a month.

• BHEL (CMP 196): This large-cap PSU counter looks good to add here at CMP 196 with strict SL placed at 170 one can looks for a potential upside towards 220 & if sustains above this then 250 in next 2 months time frame.

• Power Grid (CMP 261): This large cap power sector looks like on good support levels of 261 with strict SL placed at 220 for a potential upside towards 300 in no time if market supports.

• Hindustan Unilever Limited (CMP 2242): This large cap FMCG counter looks a safe haven in this volatility & can be added on dips towards 2210 with strict SL placed at 2100 for a potential upside towards 2500 in 3 months time frame.

Mid-Cap:

• Map My India (CMP 1674): This mid-cap counter is direct rival of Google maps in India. Looks good to add here at CMP 1674 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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