StockEdge's Morning Market Analysis - 13th Jan - 2025

Detailed Market View: The January Effect 📉

The Nifty fell 95 points on Friday, closing below 23,500 at 23,431, as broader markets weakened. All sectors declined except IT, buoyed by TCS earnings guidance. There's no leadership or support from major index players. The Dollar Index reached 109.7, reflecting weakness in US indices as well.

January continues its historically challenging track record, with significant market volatility. For the past 20-25 years, January has been known for large moves, and this year is no exception.

Technically, over the last 7-10 days, indices have been consistently making lower lows ⬇️, all rallies have been sold into, and the momentum has been clearly with the bears. FIIs have been constantly selling, as we daily get the numbers, whereas the domestic SIP liquidity has gotten the bulls to emerge at support levels, and markets rebounded sharply every time they corrected.

This time, however, this fall is different. If we look carefully, individual stocks 📉 have been hammered big, and many stocks have gone below the Budget lows 📊 — which shows that even the smart money has been on the selling side on individual stocks.

Another important point to note is about India VIX. Whenever there is a fall, India VIX spikes up. This time, however, India VIX is yet to go up — indicating that there isn’t adequate volatility or fear 😰 in the system.

The Market Breadth Figures also support this. On the Nifty 50, we still have around 40% stocks trading above the short-term moving averages — which implies that yes, the worst is yet to come.

The Nifty is near the 23,300 levels, which are the November lows. This level has been critical, as it represents the Budget day high and November lows. Time and again, this level has been bailed out by the bulls 🐂. A close watch should be kept on this level. However, if we see a closing below this level, there are lower levels to be tested. 22,800 becomes the next support if the index goes below 23,300.

Would like to highlight that if we look at the Nifty Index in USD Dollar terms, it has broken the November lows, i.e., 23,300.

On the upside ⬆️, 23,750 will act as an immediate resistance level, and 24,000 as Resistance 2. A convincing close above 24,000 is required to shift momentum positively.

The Big Picture
The current markets are in a difficult phase 😔, but if we look at the long-term monthly charts 📅, the markets are in a correction phase within a larger structural uptrend. While the short-term outlook looks weak, these moves are a natural part of market cycles 🔄.

To Conclude 📝: Levels of 23,300 and 22,800 are critical to watch. Avoid rushing into positions and wait for clear signs of a turnaround 🛑. The upcoming Budget session 📜 may act as a catalyst, but until then, maintain a cautious approach. Stay disciplined and focus on the bigger picture.

Levels for the Day:

Nifty

Support: 23,300, 23,100
Resistance: 23,500, 23,750
To view Nifty 50 levels click hereBank Nifty

Support: 48,500, 48,300
Resistance: 48,900, 49,150
To view Nifty Bank click here