As of February 4, 2025, the Indian stock market, encompassing indices such as the Nifty 50, BSE Sensex, and Bank Nifty, is exhibiting signs that may suggest a bottoming process.
Technical Indicators:
- Nifty 50: On the weekly chart, the Nifty 50 has formed a long bullish candle, engulfing the previous two weeks’ formations. This pattern indicates a potential near-term bottom reversal around the 22,786 level. However, the 200-day Exponential Moving Average (EMA) near 23,620 has acted as a significant resistance, leading to selling pressure at higher levels.
- BSE Sensex: The Sensex has demonstrated resilience by bouncing back sharply after dipping below 75,500, forming a promising reversal pattern. Currently, it is trading above its 20-day Simple Moving Average (SMA), suggesting a bullish short-term outlook. Key support levels are identified at 77,000 and 76,500, while resistance is anticipated around 78,500 and 78,800.
- Bank Nifty: The Bank Nifty index is trading above its 20-day SMA, indicating a bullish formation. As long as it remains above this level, the positive trend is likely to continue. Immediate resistance levels are observed at 50,250 and 50,500.
Derivative Market Insights:
Derivatives data indicates a potential relief rally, with 81% of Nifty futures rolled over into the February series, reflecting trader confidence. Key sectors like financial services and information technology have shown the highest open interest, suggesting focused investor interest in these areas.
Analyst Projections:
Analysts maintain a cautiously optimistic outlook for the Indian stock market. Goldman Sachs predicts that Indian equities may remain relatively stagnant over the next three months due to recent poor earnings and high valuations. However, they project a rise in the Nifty to 27,000 points within 12 months, anticipating 13%-16% earnings growth for Indian companies in 2025.
Conclusion:
While technical indicators and derivatives data suggest that the Indian stock market may be in the process of forming a bottom, external factors such as global trade developments and domestic economic policies will continue to influence market dynamics. Investors are advised to monitor these factors closely and adopt a cautious approach, considering both technical signals and broader economic indicators.
