Weekly Report: 02nd February 2025

Weekly Trend Report

Week Gone By

The key equity indices remained volatile on Budget Day, ending near the flat line despite key announcements by Finance Minister Nirmala Sitharaman in the Union Budget 2025-26. Despite this, broader markets traded mixed. With the exception of two day’s decline, the benchmark indices rallied for four consecutive days. The Economic Survey presented in Parliament has projected that India will achieve GDP growth of 6.3-6.8% in the financial year 2025-26, supported by strong fundamentals, disciplined fiscal consolidation, and steady private consumption. In the week ended on Saturday, 01 February 2025, The Nifty 50 ended slightly lower by 0.11% at 23,482, while the Sensex remained nearly unchanged at 77,505. The Nifty Smallcap 100 index edged up 0.12% to 16,560, while the Nifty Midcap 100 index declined 0.42%, closing at 53,486. Meanwhile, the Nifty Smallcap 100 index managed to stay positive, rising 0.41% to settle at 16,979.

Week Ahead

Indian markets closed the special Budget Day trading session on February 1 with little movement as investors responded to the Union Budget 2025’s capital expenditure figures. The current Q3 earnings season will continue to dominate market attention as some of the major companies are slated to announce their third-quarter earnings in the next week. On February 04, data pertaining to job openings that are part of the Job Openings and Labor Turnover Survey (JOLTS) of the US will be announced. Further, The Reserve Bank of India’s (RBI) rate-setting committee is scheduled to meet later this week (February 5-7), with analysts largely anticipating the central bank to introduce rate cuts—the first in over four years. Further, The Bank of England holds its latest policy-setting meeting this week and is widely expected to cut interest rates and hint at more reductions to come as the UK economy stagnates.

Technical Overview

The benchmark index began the trading week on a panic note, opening 152 points lower, which led to extreme oversold conditions.
However, the markets quickly rebounded following the announcement of the Reserve Bank of India (RBI) purchasing G-sec securities worth Rs. 60,000 crore, a move intended to ease liquidity measures in the equity segment.
This sparked a pre-budget rally of 721 points. On Saturday, the index closed with a sense of indecision after the budget announcement.
Ultimately, the index finished the trading week 389 points higher on a weekly basis, forming an outside bar candle pattern, with most sectoral and broader indices showing an improvement in their negative momentum for the third consecutive week.
Subsequently, the VIX cooled off 15.8% 14.09.
The pre-budget rally has resulted in a notable recovery in intermediate breadth, as over 50% of NSE stocks are now trading above 10DMA.
However, less than half of NSE stocks continue to trade above 20DMA. Additionally, the figures for 50 and 200 DMA over the past 7 and 4 consecutive weeks serve as pressing indicators, and a failure to improve in the near future could warrant caution.
From a technical standpoint the index has formed an outside bar on the weekly timeframe.
The formation of outside bars, particularly when the closing is relatively robust, indicates that buyers have prevailed. Consequently, when this pattern occurs during a pullback, it enhances the likelihood of diminishing declines.
As a result, support levels have been elevated from 22786 to 23050, with immediate support positioned near 23430. Sustaining above this zone could enable the index to gain bullish strength and test the 50 and 200 DMA, currently trading near 23809 and 24000.

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