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The Indian Union Budget 2025, to be presented on February 1st, 2025, is highly anticipated by investors and market analysts alike. The first half of fiscal year 2025 presented significant challenges for the Indian economy, characterized by reduced government spending, tighter credit conditions, decreased urban consumption, prolonged monsoon seasons, and persistent inflationary pressures. These factors contributed to a slowdown in corporate earnings, making the upcoming budget crucial for stimulating economic growth and impacting the Indian stock market. The Nifty 50 index, a key benchmark for the Indian stock market, has experienced a concerning trend, marking its fourth consecutive monthly decline – a phenomenon unseen in 23 years. This prolonged bearish trend has naturally increased investor anxieties and prompted a careful analysis of potential market movements in the coming weeks.
Rajesh Bhosale, an Equity Technical and Derivative Analyst at Angel One, offers valuable insights into navigating this market uncertainty. He highlights the technical indicators that have fueled the recent downturn. The Nifty 50 index has fallen below the 23,000 mark, breaching the support of a 'Falling Wedge' pattern, a bearish technical formation. The increase in the India VIX (volatility index), reflecting increased market fear, further exacerbated the negative sentiment. Bhosale's firm has maintained a bearish outlook for the past two to three months, advising against attempting to 'catch a falling knife' – meaning buying into a declining market. However, the approach shifts with the proximity to the crucial support zone of 22,800 - 22,400. The analyst suggests transitioning from a bearish to a cautious stance within this range.
Within this crucial support zone, the market's response to the Union Budget 2025 and global developments will become paramount. Bhosale emphasizes that unless significant negative surprises emerge from the budget or the global economic landscape, the market could see some respite in the 22,800-22,400 support zone. However, this doesn't signal an all-clear for aggressive buying. Instead, he advises a staggered approach to accumulation in the coming days, strongly emphasizing the avoidance of leveraged positions. On the upside, the analyst identifies resistance levels at the 23,000-23,050 gap (a significant previous price drop) and a stronger resistance around 23,350, coinciding with the 20-day exponential moving average (DEMA). Successfully breaking above these resistance levels would significantly alter the short-term market outlook.
Concerning sectors to watch, Bhosale points to PSU Banks, Railways, Shipping, and Defense. These sectors were prominent themes in the first half of the previous year and have since undergone a correction, making them potentially attractive at their current valuations. Any positive announcements or policy changes related to these sectors within the Budget could trigger a significant upward movement. The overall market sentiment remains cautious, but the potential for recovery within the specified support zone, coupled with the opportunities in undervalued sectors, presents a complex scenario requiring strategic investment decisions in the run-up to and following the presentation of the Union Budget 2025. The potential impact of the Budget, combined with global economic factors, makes the next few weeks critical for investors attempting to gauge the overall direction of the Indian stock market.
Source: Budget 2025: Rajesh Bhosale of Angel One reveals key Nifty 50 levels, sectors to watch out for