The Indian stock market often sees significant movement around the Union Budget announcement. As Finance Minister Nirmala Sitharaman presents the Union Budget 2024-25, investors are keen to understand how the market will react and what trends might emerge.
Positive Start Indicated by Gift Nifty
On the day of the budget, the trends on Gift Nifty suggest a positive start for the Indian benchmark indices. Gift Nifty was trading around the 24,550 level, showing a premium of nearly 30 points from the previous close of Nifty futures. This early indicator hints at a higher opening for the Nifty 50 and Sensex.
The day before the budget announcement, the Indian stock market showed cautious behaviour. The Sensex fell by 102.57 points, closing at 80,502.08, while the Nifty 50 dropped 21.65 points to settle at 24,509.25. This cautious trading reflects the uncertainty and anticipation that typically precedes significant announcements such as the Union Budget.
Key Technical Insights
The Nifty 50 formed a doji-like pattern on the daily chart, signalling indecision among traders. Despite recovering from early morning weakness, the Nifty is exhibiting signs of weakening momentum.
According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the Nifty bounced back from the 20-day Simple Moving Average (SMA) after a sharp fall. However, the 14-day Relative Strength Index (RSI) at 64.84 is falling and remains below its 9-day Exponential Moving Average (EMA), indicating a weakening momentum.
Shetti warns of further downsides if the immediate support of 24,362 is broken, while any rallies may face resistance between 24,595 and 24,646.
Nifty 50 and Bank Nifty Predictions
Nifty 50
The Nifty 50 ended with minor losses on the day before the budget, holding above the 24,500 level. Rupak De, Senior Technical Analyst at LKP Securities, notes that a small-bodied candle formed on the daily chart following a bearish engulfing pattern. This suggests a pause before the next movement. De believes that a move above 24,550 could trigger a meaningful rally, while support is placed at 24,480. A decisive fall below this level might induce selling pressure in the market.
Bank Nifty
The Bank Nifty index outperformed slightly, closing marginally higher by 15 points at 52,280. Rupak De observes that the Bank Nifty closed with a small-bodied candlestick on the daily chart, just above its support at 52,200. Active call writers at higher strike prices indicate limited upside potential. Despite this, the Bank Nifty managed to close above its 21-day EMA, suggesting resilience in the underlying trend. De predicts a sideways or range-bound movement for Bank Nifty until it breaks key levels, with support at 52,000 and resistance at 52,800.
Strategic Approaches for Traders and Investors
VLA Ambala, Co-Founder of Stock Market Today, suggests a dip-buying strategy for traders and investors. With the Union Budget expected to bring volatility, Ambala recommends leveraging the current bullish trend. She expects the Nifty to find support between 24,250 and 24,200, and face resistance around 24,580 and 24,700 levels.
As the Union Budget 2024-25 is presented, the Indian stock market is poised for potential volatility. Key announcements in the budget will drive market sentiment and influence trading patterns. Investors and traders should keep an eye on technical levels and be prepared for both support and resistance challenges.
Disclaimer: The views and recommendations mentioned are those of individual analysts or broking companies and not of the author. Investors should check with certified experts before making any investment decisions.
