CONSOLIDATION SEEN NEAR THE BLIND SPOT! NIFTY TO DEFY THE RULES OF GRAVITY FOR EITHER PARTY!

Dated: 18/01/2025

It has been a pure taboo consolidation week for the either party let it be Bulls or Bears where Nifty remained in a tight range with nowhere to go on any specified path both the parties remained neutral throughout the week. Nifty continued to hold on to our recently listed crucial support juncture of 23000-23200 kind of levels where it managed to give a decisive close at 23203.20 last week. In all these the levels of 23000-23200 still remains a crucial make or break zone not only for Nifty but for the broader markets as well.

This time the blood stains remain on no one’s hands as Nifty remains in a tight range of merely 300-370 points however; heavy weight stocks with good Q3 results have shown movement on their own. This market could remain neutral with counters posting good results may show outperformance while underperformance could be seen on weak results counter.

However, major directional flow of the entire indices still depends largely on institutional activities wherein the FII’s are still on sell side at large. 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. 2,23,978.55 crore combined of October, November, December & so far in wholesome of January 2025. 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. 2,03,639.09 cr. since the beginning of October 2024 & in the Calendar year 2024 they have bought more than Rs. 5 Lacs cr.

Since the broader markets have been witnessing no mercy from the ruthless FII’s who are expected to have been on the sell side due to following reasons:

1. Weaker Rupee

2. Poor Q2 & Q3 forecast earnings of the companies

3. Slowdown in the Indian growth rate

4. Expected higher taxation rates in the upcoming budget

Despite all above the domestic Indian Equity Markets have 3 key factors to watch-out in the coming weeks ahead:

1. Trump taking over as a President on 20^th January 2025 i.e. coming Monday

2. Upcoming Union Budget 2025

3. RBI Monetary Policy Committee meeting is scheduled from February 5-7, 2025

However, this pre-news structured selling seems legit when Q2 GDP data was published last Friday where lower than estimated GDP came as “India’s GDP growth slows in Q2 FY 2024-25 to 5.40% while Fiscal Deficit at 46.50% of FY 2024-25 targets. It now looks like FII’s must have sensed earlier these possibilities of GDP slow down which lead them for a relentless selling. But now the eye’s rolled back into the soon coming Q3 GDP numbers which will be released by January 2025 end possibly.

The entire move by the Nifty remains uncertain as to any side of uni-directional move. As we move ahead the crucial support still remains at 23000-23200 kind of levels where the fate of the entire bull market scenario will be tested while from hereonwards the potential expected upside & its immediate hurdle could be witnessed hard at 23400-23500 followed by 24000-24250 major upside is now expect only if Nifty gives a close on or above 24250 till then the pressurized selling could be witnessed on these upside levels. However, the January series still has hope for a pre-budget rally near the potential upside levels of 24850-25200 kind of levels.

US Federal Reserve cut interest rates by a quarter point on 14^th December 2024 and signaled a slower pace of cuts ahead, amid uncertainty about inflation and President-elect Donald Trump’s economic plans. Policymakers voted 11-to-1 to lower the US central bank’s key lending rate to between 4.25 per cent and 4.50 per cent, the Fed announced in a statement. They also penciled in just two quarter-point rate cuts for next year, and sharply hiked their inflation outlook for 2025 which intern puts additional pressure not only on Indian markets but also on US markets as well.

The November series closing have shown good formation on Monthly charts where 23000-23200 now remains a major crucial support for a potential upside towards 24000-24250 & 24850-25200 respectively. However, major upside towards 26500-27000 could be seen till the end of February 2025 which instance is expected another ATH in the Nifty.

However, we have also clearly mentioned the expected potential upside could be supported by the FII’s net longs now stands as low as below 15-17%  which continuously signifies & has formed the bottom formation somewhere near 23000-23200 which indeed has turned the game & bottom was formed in Nifty. Now we expect the FII’s long positions to rise towards 48% followed by 67% in the coming month ahead which may take Nifty & broader markets even on the higher levels.

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

Domestic News:

• China develops news Iron making method that boosts productivity by 3,600 times

• Stock futures hit session high after latest US economic report

• Goldman hands $80 million retention award to solomon waldron

• Billionaire Trump pal phil ruffin is ready to sell the aging circus casino

• According to Forbes new hacking warning for Gmail, Outlook, Apple mail users.

International news:

• Infosys CEO on low salary hikes and toxic work culture on IT roll out.

• Adani energy solution execution of spa for acquiring 100% equity shares of super height Infraspace.

• India has approved an investment of 114.4 billion rupee to revive a state-owned steelmaker that’s struggling to survive in the face of financial hardship.

• Tech Mahindra ltd reported total income of Rs. 13302.2 cr. up by. 85%.

• Wipro ltd reported total income of Rs. 23,322.9 cr. up by 2.27%.

• Punjab national bank has announced the appointment of Mr. Umang Nahata as the chief executive officer of the company.

• BOM gross NPA stands of 4124.3 cr. up by 6.89% total income stands at Rs. 7,112.43 cr. up by 21.55%

The Centre’s gross tax collections (post refunds but before transfers to states), stood at Rs 4.6 trillion in the first two-months of the current financial year, 15.9% higher than the year year-ago level, data released by the Controller General of Accounts (CGA) showed on Friday. This is against 10.6% annual growth pegged in the Budget for FY25.

Net Direct tax collection Net direct tax collection rises 16.45% to Rs 15.82 trillion till 17^th December 2024 indicating a strong economy and corporate performance.

Net tax revenue (after refunds and after devolution to states) during April-May, stood at Rs 3.19 trillion, accounting for 12% of the Budget estimate of Rs 26.02 trillion. However, during the same period of FY24, net tax revenue had accounted for about 16% of the Budget target.

In the institutional segment the FII’s remained negative with net sell of Rs. 25,218.60 cr. & so far sold more than Rs. 2,23,978.55 cr. so far since beginning of October 2024 but here DII’s have been the buyer’s with Rs. 25,151.27 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.

Nifty last week remained into a pure taboo consolidation wherein the broad move was wiped into a move of 300-400 points’ movement entirely to give a precise closing at 23203.20. Nifty may continue to remain on the edge of its crucial support levels of 23000-23200 where the fate of the entire bull market scenario will be tested while from hereonwards the potential expected upside & its immediate hurdle could be witnessed hard at 23400-23500 followed by 24000-24250 major upside is now expect only if Nifty gives a close on or above 24250 till then the pressurized selling could be witnessed on these upside levels. However, the January series still has hope for a pre-budget rally near the potential upside levels of 24850-25200 kind of levels. This time the major potential upside could be triggered by Nifty FMCG followed by Reliance Industries in Oil & Gas space.

Sensex too witnessed a pure taboo consolidation on the current levels where whole move largely had an 1100-1200 point’s movement to give a close at 76619.33. In the coming weeks ahead Sensex too could find its crucial support within the crucial pre-defined support of 76000-76800 range while on the upside immediate hurdle could be witnessed at 77500 followed by 80100 & furthermore 81000-82000 kind of levels. While the potential upside could take Sensex towards another ATH in next 2 months which could be around 86000-87000 kind of levels. This time the major potential upside could be triggered by FMCG followed by Reliance Industries in Oil & Gas space.

In the banking sector Bank Nifty the crucial supports now remains within the deifined range of 47500-48000 with potential upside towards 49500-51000 kind of levels. The broader range could be support by certain heavy weight in PSU heavy weight banks like PNB & SBI etc.

In Nifty Financial Services the crucial supports 22000-22300 while major upside could only be possible on a close above 23000 with potential upside towards 23400-23800 kind of levels.

 “Nifty IT” had some steep correction lately with mixed results by certain heavy weight counters. In the coming weeks ahead the crucial supports in this counter now remains on the subdued levels of 40000-41000 while potential upside now remains 44500-46000 kind of levels. But the broader target of 53000 could get shifted till May 2025 but remains intact. 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:  23203.20
Nifty Hurdle / Immediate Target: 23400-23500 /24000-24250 / 24850-25200 (As the case may be)
Nifty Immediate Crucial Support: 23000-23200

Sensex CMP: 76619.33
Sensex Hurdle / Immediate Target: 77500 / 80100 / 81000-82000 / 86000-87000 (As the case may be)
Sensex Immediate Crucial Support: 76000-76800 (As the case may be)

Bank Nifty CMP:  48540.60
Bank Nifty Hurdle / Immediate Target: 49500-51000
Bank Nifty Immediate Crucial Support: 47500-48500

Nifty Financial CMP: 22608.20
Nifty Financial Crucial Target: 23000 / 23400-23800 (As the case may be)
Nifty Financial Crucial Support: 22000-22300

Nifty IT CMP: 42032.20
Nifty IT Potential Upside: 44500-46000 / 53000 (As the case may be)
Nifty IT Crucial Supports: 40000-41000

 

Stock on Radar:

Large Caps:

• Adani Enterprises (CMP 2400): Since Trump is taking over presidency of America from Monday onwards & Adani group is likely to get relief from all their charges from US regulator’s Adani Enterprises is likely to witness a huge potential upside from here onwards. This counter looks good to add here at CMP 2400 with strict SL placed at 2180 for a potential upside towards 2700 in no time.

• IRCTC (CMP 779): This railway counter remains on radar since budget is coming up & looks good to add at CMP 779 ith strict SL placed at 738 for a potential upside towards 850-920 in no time.

• Reliance (CMP 1302): This large-cap counter has been on our radar since subdued levels of 1265 & from there it has already tested 1217. This counter again giving opportunity on dips towards 1280 with broader markets looking bullish this heavy weight giant may continue to rise from 1280 onwards the potential upside form here on wards could be around 1600 in the next 3-6mths time frame.

• LIC Housing Finance (CMP 562): This large-cap housing finance counter looks good to accumulate here at CMP is on the verge of a long term breakout retest zone at 542.50 & still looks good to accumulate here at 562 with strict SL placed at 500 for a potential upside towards 650 in 3 month’s time frame.

• Samvardhana Motherson International (CMP 151): This large-cap auto counter has been on our radar since subdued levels of 151 & still looks good for a reversal from CMP 151 with strict SL placed at 120 one can expect a potential upside towards 190-200 in 3 months time frame.

Mid-Caps:

• CE Info Systems (Map My India)(CMP 1651): Map my India has been on corrective mode since 2748 levels & from there it has corrective nearly 40% in this market turmoil. Looks good to accumulate here at CMP 1651 with strict SL placed at 1480 for a expected potential upside towards 1900-2000 in no time.

Small & Micro-Caps:

• NDTV (CMP 160): This is another Adani group counter has been beaten down badly but since Trump taking over charge of US as a president we may now become positive in this counter from CMP 160 with strict SL placed at 120 one can expect a potential upside towards 270 in no time.

 

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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