It was a painful week for the market, where BSE companies lost ₹11 lakh crore in market capitalization in the last two trading sessions. The entire gloom can be attributed to the Adani Group’s mayhem, which has lost ₹4 lakh crores in market capitalization in the last two trading sessions following the publication of a research report with red flags by Hindenburg. The Nifty, Sensex, and Bank Nifty have all broken through key support levels, but bulls are hoping that the budget will act as a catalyst, putting bears on the defensive.
The Union budget is a key domestic event on February 1st, and the outcome of the US FOMC meeting scheduled for the same day late at night is a key global event. A bunch of companies will come out with Q3 earnings this week, while monthly auto sales numbers and macroeconomic numbers from the USA will be other important factors. The market will continue to monitor Adani Group, whose stock price has fallen below the floor price of its FPO. FIIs’ flow will be important because they sold more than ₹9,000 crore in the Indian equity market last week.
Technically, Nifty has broken down its one-month range of 18,200–17,800, which is not a good sign; however, 17425 is an immediate support while the 200-DMA of 17,300 is a critical support that bulls will try to protect. On the upside, 18,000 will act as a critical barrier, and 18,200 is a major hurdle.
Bank Nifty has fallen below its 100-DMA decisively, but 40,000 is an immediate psychological support level, while the rising 200-DMA around 39,000 will be the next critical support level. On the upside, the 41,500–41,725 area will be a critical resistance zone, while 42,750 is the next hurdle.
Derivative data looks extremely oversold as the short exposure of FIIs in index futures jumped to 75% while the put/call ratio is sitting at 0.74.
(Author is Head of Research at Swastika Investmart. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions)
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