With yesterday’s budget day market being an extremely volatile session, as much as media would portray the indices’ performance as “closed flat”, the intraday whipsaws were a mere treat to the eyes. As a market participant/trader though, if one has handled this session and come out profitable, hats off to you! Overall, we’ve seen a pretty balanced budget being presented and the main beneficiaries here would be the salaried class, which will help low-income earners, especially given the increase in cost of living. Another major change would be the increase in excise duty component on cigarettes, by 16%. This would result in ITC having to raise prices, but consumption would not really take a hit here (do we really see someone quit smoking because it’s become too expensive?).
Moving on to our markets, post presentation, we saw Nifty rally till 17972 (with 18000 being a key resistance level), after which we saw consistent selling in the markets across all sectors. There was a huge increase in selling volumes, which led to the index touching the day’s low of 17353, but a very swift recovery in the end resulted in a close above 17600 (this being the key support level) which would also be testing it’s 200 EMA on the daily timeframe. Similarly, Banknifty is also taking support at the similar level on it’s charts, but it would take time to form a bottom here and then look for an upside. Sectorally, both Nifty Auto and Nifty PSE are the ones who are holding fort, with the auto index poised for a good breakout when markets bounce back. Similarly, PSE sector has been one of the strongest in this correction with chart structure remaining intact, and forming a higher bottom as seen below.
From an investor’s perspective, one should look at this as a very good opportunity in the market, for the upcoming couple of years as overall our economy is on track for good growth, markets being supportive and recession fears not affecting the Indian economy as such. In case of any changes in the future, markets would discount it and when prices reflect the same, our stance would change. Till then, we remain bullish on the economy and Indian markets as a whole. Main reason for this view being, Nifty’s price structure looks good and ready for more upside, but at the same time, being an investor, one has to have ample patience to handle the running corrections we would see along with the future rallies as well. Stay invested in strong sectors, which would give you a good chance for outperforming the market on an overall basis.
With today being the first expiry of the February series, some amount of volatility is expected by default, but keep an eye out for 17700 and 17800 levels being key resistance points in the smaller timeframes, along with 17500 as a good support levels. 17700 CE along with 17500 PE would be good bets for expiry today. Consolidating above 17700 for a good 1 hour or so can lead to 17800 as well, but one always needs to keep in mind, proper risk management is the key. On Banknifty, crossing 40700 would be key for more upside, keep an eye out for 40700 CE, which can give a good spike in intraday. 39200 PE would be a good expiry bet, and one can expect full decay here. Have a good trading day, and may the force be with you!
Disclaimer: this post is for educational purposes only, we are not SEBI registered analysts. Equity Investments are subject to 100% market risk, please consult your financial advisor before investing.