LAST MAN STADING IN NIFTY @22500-22600 RANGE ANY BREACH BELOW COULD TRIGGER MAYHEM IN THE BROADER MARKETS

Dated: 15/02/2025

In the midst of turmoil Nifty last week failed to cross the immediate hurdle of 23800-23850 where in turn the fatal sell off once again began which dragged the Nifty towards another 9 month low’s of 22775.80 to give a close at 22929.25 where overall Nifty fell nearly 1000 points again from the recent attempt of a breakout from 23800-23850 kind of levels. These turmoil’s have filled investors / traders mind with extreme fear as their respective Portfolio’s have declined as much as 30-50% while the Nifty has eroded nearly 13.50% from the ATH (All Time High) of 26277.35.

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.

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. However, if these levels remain intact then this time immediate hurdle may prevail within the range of 23500-23600 kind of levels. While if on the upside these levels get breached then we have possibility of hitting 24000-24250 kind of levels in no time.

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. 2,64,777.15 crore combined of October, November, December & 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. 2,40,863.75 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 15.85% & 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):

• Rupee recovered towards 86.327 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:

• Easing up of Dollar index below 107

• UK Financial Sector Faces Competitive Threats

• UK Foreign Ministry Announces £100 Million Development Finance Initiative

• Top finance and law firms are expanding operations in the Middle East, drawn by the region’s sovereign wealth funds and favorable business environments. Notable expansions include Campbell Lutyens opening a Dubai branch, Eisler Capital and Walleye Capital moving operations to Dubai, and Marshall Wace establishing an office in Abu Dhabi.

• 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

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. 19,004 cr. but here DII’s have been the buyer’s with Rs. 18,745.02 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 remain under pressure where once again from 23850 Nifty lost nearly 1000 points hitting once again its crucial support zone range of 22500-22600. 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. However, if these levels remain intact then this time immediate hurdle may prevail within the range of 23500-23600 kind of levels. While if on the upside these levels get breached then we have possibility of hitting 24000-24250 kind of levels in no time. This time the major move could come from Banking, Consumption space & Reliance Industries could end its dry movement soon support the broader markets.

Sensex too remained under pressure where it came to hit the lower end crucial support zone of 75000 as any breach below could give us major setback where it may slide back towards 70000-71000 in the coming months ahead while if it hold on to these crucial support zones we might have chance it may rise back again towards 78000-79000 zone while major upside if these gets broken on the upside could be seen towards the levels of 82000-83000 in no time. This time the major move could come from Banking, Consumption space & Reliance Industries could end its dry movement soon support the broader markets.

In Bank Nifty the crucial support now remains at 47500-47800 kind of levels while major downside could be seen on breaching of these levels which could draw down towards 45000 kind of levels while on the upside the potential levels could come up towards 51000-52000 kind of levels 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. 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:  22929.25
Nifty Hurdle / Immediate Target: 23500-23600 / 23800-23850 / 24200-24250 (As the case may be)
Nifty Immediate Crucial Support: 22500-22600 / 21500 (As the case may be)

Sensex CMP: 75939.21
Sensex Hurdle / Immediate Target: 78000-79000 / 82000-83000 (As the case may be)
Sensex Immediate Crucial Support: 75000 / 70000-71000 (As the case may be)

Bank Nifty CMP:  49099.45
Bank Nifty Hurdle / Immediate Target: 51000-52000
Bank Nifty Immediate Crucial Support: 47500-47800 / 45000 (As the case may be)

Nifty Financial CMP: 23186.90
Nifty Financial Crucial Target: 24000
Nifty Financial Crucial Support: 22000-22700

Nifty IT CMP: 41311.15
Nifty IT Potential Upside: 44500-46000 (As the case may be)
Nifty IT Crucial Supports: 40000-40500

 

Stock on Radar:

Large Caps:

 

• PFC (CMP 371): This large-cap PSU counter looks like on crucial support levels & looks good to accumulate here at CMP 371 with strict SL placed at 330 one can expect a potential upside towards 430 in a month time frame.

• Power Grid (CMP 257): This large cap power sector looks like on good support levels of 257 wt strict SL placed at 220 for a potential upside towards 300 in no time if market supports.

• SBI (CMP 722): This large-cap PSU counter has recently posted excellent results & saw some steep profit booking afterwards. Looks like settled on a good support zone at CMP 722 with strict SL placed at 700 one can expect a potential upside towards 800-850 kind of levels in 2 months time frame.

• Britannia (CMP 4940): This large-cp FMCG counter looks good to accumulate here at CMP 4940 with strict SL placed at 4600 one can expect a upside towards 5500 in not time.

Mid-Cap:

• India Mart (CMP 2124): With budget focusing on consumptions this counter looks attractive at CMP 2124 with strict SL placed at 2000 one can expect a potential upside of 3000 in 3 months time frame.

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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