As of February 4, 2025, Indian equity markets are poised to open higher, mirroring positive trends in Asian markets following the U.S. decision to pause planned tariffs on Canada and Mexico. This move has alleviated some global trade concerns, contributing to a more optimistic market sentiment.
Recent Market Performance:
- February 3, 2025: Both the Nifty 50 and BSE Sensex experienced declines, influenced by global trade tensions stemming from U.S. tariff impositions. The Nifty 50 fell by 0.93% to 23,265.1 points, while the BSE Sensex dropped by 0.81% to 76,874.54.
- February 1, 2025 (Union Budget Announcement): The markets exhibited high volatility, ultimately closing flat. Sectors such as FMCG and real estate saw rallies, while others remained subdued.
Technical Analysis:
- Nifty 50: On the weekly chart, the Nifty 50 formed a long bullish candle, engulfing the previous two weeks’ formations, indicating a potential near-term bottom reversal at the 22,786 level. However, the 200-day Exponential Moving Average (EMA) around 23,620 has acted as a strong resistance, leading to selling pressure at higher levels.
- BSE Sensex: The index 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.
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.
Trading Strategy:
Given the current market dynamics, traders are advised to monitor key support and resistance levels closely. Maintaining positions above the 20-day SMA could be beneficial, with a focus on sectors exhibiting strong open interest in the derivatives market. Implementing appropriate risk management strategies, such as setting stop-loss orders, is essential to navigate potential volatility.
In summary, while recent global trade developments have introduced volatility, technical indicators and derivatives data suggest potential opportunities for traders. Staying informed and adopting disciplined trading approaches will be crucial in capitalizing on these market conditions.
