Weekly Trend Report
- 24th January 2025
Week Gone By
The Indian benchmarks ended the week with a modest decline of 0.5%, driven by moderations in corporate earnings and potential uncertainties led by U.S. policies under President Donald Trump. Additional pressure was created by the continuous exodus of FPIs from the domestic market. On the economic front, India’s foreign exchange reserves declined by USD 8.7 billion to USD 625.9 billion as per the latest RBI data. HSBC Flash India Composite Output Index fell from a final reading of 59.2 in December to 57.9 in January. This indicated the weakest rate of expansion in 14 months, however remained above the long term average of 54.7. Globally, The Bank of Japan raised its key short-term interest rate to around 0.5%, the highest in 17 years, in an effort to further “normalize” its monetary policy.
Week Ahead
The approaching week holds significant importance as the domestic stock market gears up for the Union Budget presentation on Saturday, 1 February 2025. Both BSE and NSE will conduct live trading to accommodate this event. This marks Finance Minister Nirmala Sitharaman’s eighth consecutive Budget presentation, sparking high investor anticipation. Throughout the week, focus will remain on corporate earnings. Globally, key events include the US Federal Reserve’s interest rate decision and US Q4 GDP growth data, both set for Thursday, 30 January 2025. Additionally, Japan’s Consumer Confidence Index for January is slated for release on Wednesday, 29 January 2025.
Technical Overview
- The benchmark index commenced the trading week with a positive outlook. However, it experienced a significant decline on Tuesday, with the previous gap down area near 23430 serving as an immediate supply zone, marking a new low of 22976 in the current downward trend.
- A mild recovery was observed in the latter half of the trading week; nonetheless, the week concluded with a decrease of 111 points, characterized by an outside bar formation, establishing the weekly lows as immediate pivotal support.
- The Volatility Index (VIX) recorded its third consecutive weekly close at elevated levels of 16.7, suggesting the likelihood of further increases in the following week.
- The week ended with all broader indices and the majority of sectoral indices exhibiting a downtrend, although there was slight improvement in their negative momentum for consecutive weeks.
- The percentage of stocks trading above the shorter-term moving averages continues to remain below the 50% bullish threshold, indicating repeated oversold conditions and suggesting that the forthcoming reversals may continue to be weak.
- The percentage of stocks trading above 50 DMA remains significantly below the median threshold for six consecutive weeks, while those trading above 200 DMA have been below for three weeks, presenting a negative development.
- On the momentum breadth front, a modest recovery was observed on Monday; however, it failed to provide any significant follow-through during the week, reflecting a lack of broader market participation in the bullish direction. The breadth analysis further indicates that the downtrend is likely to persist across all timeframes.
- From a technical perspective, the index operates within a no-money environment, and a choppy market is anticipated to continue until the Union Budget.
- Trading is confined to a no-trading zone, with overhead resistance near 23430 and support within the range of 23060-22976. It is imperative that the support zone remains intact on a closing basis to foster bullish strength.
- Currently, the overall swing confidence stands at zero; thus, it is advisable for portfolios to refrain from engaging in any open permissible risk.
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