Weekly Trend Report
- 17th February 2025
Week Gone By
The key equity indices witnessed selling pressure during the week following U.S. President Trump’s announcement of a 25% tariff on steel and aluminium imports. India’s retail inflation, based on the Consumer Price Index (CPI), eased to a five-month low of 4.31% in January 2025, mainly due to lower food prices whereas, India’s retail inflation, based on the Consumer Price Index (CPI), eased to a five-month low of 4.31% in January 2025, mainly due to lower food prices. In the week ended on Friday, 14 February 2025, the S&P BSE Sensex tanked 2.47% to settle at 75,939.21. The Nifty 50 index dropped 2.68% to settle at 22,929.25. The BSE Mid-Cap index dropped 7.70% to close at 39,731.79. The BSE Small-Cap index slumped 9.47% to end at 45,411.25.
Week Ahead
The Indian stock market is expected to remain under pressure next week due to a continued foreign institutional investor (FII) outflows and weak corporate earnings, particularly among mid-and small-cap companies. Concerns regarding tariffs and a depreciating rupee are also contributing to the negative sentiment. Although the recent talks between Modi and Trump offer some hope for a trade deal, a sustained market recovery is unlikely until FII selling decreases. Key economic data to watch next week includes the release of the US Federal Open Market Committee (FOMC) minutes on Thursday, February 20, 2025. Additionally, Japan’s inflation data for January 2025 is scheduled for release on Friday, February 21, 2025, alongside the HSBC Composite, Services, and Manufacturing PMI Flash data for February. The ongoing trend of investors favouring large-cap stocks over mid-and small-cap stocks is anticipated to continue.
Technical Overview
- Nifty is currently trading at 22,929, reflecting a sharp decline of approximately 630 points or 2.68% over the past week, indicating strong bearish sentiment. The index has faced persistent selling pressure around the 23,500 level, which has now emerged as a significant resistance zone, preventing any meaningful recovery. Despite this weakness, Nifty has successfully defended the 22,750-22,800 support zone twice during the week, highlighting the importance of this level as a key short-term base.
- A major source of pressure on the markets has been aggressive bearish positioning by Foreign Institutional Investors (FIIs), who are currently holding short positions on the Index to the extent of 84.13%, adding to the overall selling bias. Sectorally, Nifty Realty emerged as the worst performer, losing over 9.5% during the week, while Nifty Media also experienced significant weakness, declining by approximately 8%.
- Options data further confirms the bearish outlook, with the highest call writing seen at the 23,500 strike price, followed by notable resistance at the 23,000 strike, signaling that these levels could cap any near-term upside. On the support side, the highest put open interest is seen at the 22,500 strike, followed by 22,800, indicating that these levels may offer some cushion against further downside.
- Technically, Nifty is trading below its critical 20, 50, 100, and 200-day Exponential Moving Averages (EMAs), signaling a bearish structure on the charts and suggesting that recovery attempts may face supply pressure. Additionally, the MACD has given a negative crossover, indicating a loss of bullish momentum, while the RSI has also turned negative, reflecting weakening strength in the index.
- Given this backdrop, the sustenance of Nifty above the 22,800 level is crucial for preventing further downside; a decisive break below this zone could trigger further selling pressure, pushing the index towards the 22,500 support zone, while a rebound above 23,000 could provide some relief to market participants.
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