Weekly Trend Report
- 20th January 2025
Week Gone By
The equity indices saw significant losses during the week. The BSE Sensex slumped by 759.58 points to 76,619.33, while the Nifty 50 tumbled 228.30 points, reaching 23,203.20. In India, CPI inflation eased to 5.22% in December. India’s industrial growth rose to a six-month high of 5.2%. However, foreign exchange reserves declined by $5.7 billion, and wholesale price inflation increased to 2.37%, driven by a rise in manufactured goods. Globally, China’s exports and imports exceeded expectations in December, while its economy grew 5% in 2024, with industrial production and retail sales showing notable gains. In the US, nonfarm payrolls rose by 256,000 in December, and the unemployment rate fell to 4.1%, despite a slight rise in unemployment claims.
Week Ahead
Next week, investor sentiment will be influenced by a mix of domestic and global factors, including key economic data releases, India’s Composite, Manufacturing, and Services PMI for January will be released on January 24, along with the Union Budget and corporate earnings from major companies. Globally, market attention will be on the inauguration of the 47th US President, Donald Trump, on January 20, along with key data releases from Japan, including the balance of trade and inflation data on January 23 and 24. Additionally, US existing home sales data for December will be released on January 24.
Technical Overview
- The Nifty50 index began the trading week under continued selling pressure from the previous week, reaching a weekly low of approximately 23047, establishing a crucial pivotal support level.
- The index fluctuated within a range of 344 points and concluded the week on an uncertain note, raising questions about the persistent selling trend, which can be viewed as a minor positive development.
- Notably, the week ended with a 5.6% increase in the VIX, reaching levels of 15.7.
- Despite most broader and sectoral indices remaining in a downtrend, many experienced an improvement in negative momentum, which is a positive sign.
- From a market breadth perspective, the past week showed signs of improvement amidst ongoing oversold market conditions.
- Although the percentages of stocks trading above the 10, 20, 50, and 200 DMA levels are below the median, they demonstrated positive trends as the week progressed, indicating a buildup of strength in the intermediate trend following extreme oversold conditions.
- However, the sustained presence of over 50% of stocks trading below their 200 DMA could invite further selling pressure, warranting a cautious approach.
- The momentum market breadth started this week with a heavily oversold red day, followed by a technical reversal, although this reversal was not robust enough to suggest a transition from a no-money market to a hard-money market.
- Technically, the index is currently situated in a no-trade zone, with immediate resistance around 23430-23340 and support near 23060-23000.
- Movement beyond this boundary could provide a clearer directional bias. The overall swing confidence of the market remains low, indicating that portfolios should refrain from taking any open permissible risks at this time.
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