Weekly Report: 07nd February 2025

Weekly Trend Report

Week Gone By

The domestic equity benchmarks recorded modest losses this week, influenced by several key factors. The Union Budget announcement, presented by Finance Minister Nirmala Sitharaman, affected investor sentiment. On the monetary policy front, the Reserve Bank of India (RBI) made a notable move by cutting interest rates for the first time in nearly five years, as anticipated, in an effort to revive economic growth. India’s fiscal deficit for the first nine months of the current fiscal year stood at Rs. 9.14 lakh crore, with total receipts at Rs. 23.18 lakh crore and overall government expenditure at Rs. 32.32 lakh crore. On the global front, US President Donald Trump extended the proposed 25% import duties on Canada and Mexico by 30 days but remained firm on China, allowing his 10% tariffs on Chinese goods to take effect on Tuesday.

Week Ahead

The market will likely follow global cues for direction next week, while the ongoing earnings season is likely to drive stock-specific movements. The counting of votes for the much-anticipated Delhi Assembly elections is scheduled for Saturday, 8 February 2025. On the domestic front, India’s Industrial production data for December and consumer price inflation data for January will be released on Wednesday, 12 February 2025. Additionally, WPI inflation data and balance of trade data for January are set to be published on Friday, 14 February 2025. Globally, investors are closely watching the U.S. payrolls data, due on Friday, amid cautious optimism that a full-blown trade war can be avoided. Fed Chair Jerome Powell’s testimony is scheduled for Tuesday, 11 February 2025, while U.S. core inflation data for January will be released on Wednesday, 12 February 2025. This will be followed by Producer Price Inflation data on Thursday, 13 February 2025, and retail sales data for January on Friday, 14 February 2025.

Technical Overview

The Nifty50 index began the trading week on a negative note, influenced by global market cues, but witnessed a recovery on the following day. Nevertheless, the upward movement was constrained by the 50-day and weekly moving averages, which have established a significant resistance zone near 23768-23754.
The index ultimately concluded the trading session with an increase of 77 points for the week, while the VIX declined by 2.9% to 13.69.
Throughout the week, the majority of broader and sectoral indices remained in a downtrend, trading below their 50-day moving averages.
However, there has been a notable improvement in momentum, as the indices have transitioned from the negative momentum quadrant to a more favorable positive momentum quadrant, representing a positive development.
In terms of market sentiment, over 70% of stocks traded above 10 DMA, reaching overbought levels during the week; however, due to profit-taking in the latter half of the week, only 58% of stocks continued to trade above 10 DMA.0
Examining broader trends, the proportion of stocks trading above the 50-day moving average and 200 DMA has remained significantly low over the past weeks, signaling a need for caution.
On the momentum breadth front, the data exhibited a positive reversal following four consecutive weeks of decline; however, it has not provided a robust follow-through, while the higher time frames still indicate a persistent downtrend in breadth.
From a technical perspective, the current relief rally appears to be a result of the oversold conditions following a 13% correction from recent peaks.
The index has immediate support near 23430, followed by 23050; maintaining a close above the last identified support level will be critical in mitigating further declines. Conversely, the level of 23770 presents a significant overhead resistance, and reclaiming this level on a closing basis will likely attract additional bullish momentum.
We continue to operate within a challenging monetary environment, characterized by limited trading setups, and it is expected that the ongoing choppiness will persist in the coming week.

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