Table of Contents

• Introduction

  • Market Performance Overview

• Updated Technical Analysis

  • Key Support Levels

  • Resistance Levels

  • Indicators

• Global Economic Factors Impacting Markets

• Domestic Economic Calendar

  • Conclusion

  • Disclaimer:

Introduction

As we approach the end of January 2025, the Indian equity markets face intense bearish pressure. The Nifty 50 index has closed at 22,829.15, marking a significant daily loss of 263.05 points (-1.14%). This article comprehensively analyzes the market's performance, updated technical insights, and the broader economic factors influencing investor sentiment.

Market Performance Overview

The Nifty 50 has now declined by over 4% this month, breaking all major support levels. If this trend persists, January will mark the fourth consecutive month of losses—a streak not seen in eight years. Historically, such prolonged declines are rare; the last instance of five successive monthly losses occurred in 1996, with an aggregate fall of 26%. The broader market is also underperforming, with the Smallcap Index down by approximately 14% from its peak, reflecting widespread investor caution amid domestic and global uncertainties.

Updated Technical Analysis

Key Support Levels

• Immediate support is now at 22,765, aligned with Fibonacci retracement levels.

• A more critical support lies at 21,737, which could be tested if bearish momentum continues.

Resistance Levels

• The first resistance level is identified at 23,155, marked by an EMA crossover.

• A stronger resistance stands at 23,489, coinciding with the Fibonacci 0.786 retracement level.

Indicators

• MACD: The histogram remains negative at -20.79, signaling continued bearish momentum.

• Williams %R: At -95.62, this indicator is in oversold territory, suggesting potential short-term consolidation or a minor pullback.

• Stochastic RSI: With values of D = 52.06 and K = 50.46, it indicates neutral momentum but leans toward a bearish bias.

Global Economic Factors Impacting Markets

1. US Federal Reserve Policies:
   With Jerome Powell serving his second term as Fed Chair until May 2026, interest rate decisions remain critical for global markets.

2. ECB Rate Cuts:
   The European Central Bank (ECB) emphasized a cautious and gradual approach to cutting interest rates but signaled that more easing is likely, according to minutes from its December 11-12 meeting. Last month, the ECB cut rates for the third consecutive time, citing slowing inflation, tho the timing and pace of further cuts remain uncertain.

The ECB is expected to cut its 3.00% deposit rate by another 25 basis points at its January 30 meeting, with further reductions likely throughout the year, potentially bringing the rate to 2% by the end of 2025—near the neutral level that neither slows nor stimulates growth.

Domestic Economic Calendar

Domestically, all eyes are on Finance Minister Nirmala Sitharaman’s Union Budget presentation on February 1—a pivotal event for fiscal policy direction as India navigates global economic headwinds. Key themes expected in the budget include fiscal prudence and discipline to address inflationary pressures and sustain economic growth amid global uncertainties.

To add to these woes are the week’s quarterly earnings as expected by India Inc. and the markets.

Conclusion

The Indian equity markets face a challenging environment as critical support levels are tested amid persistent bearish trends. With global uncertainties and key domestic events like the Union Budget on the horizon, investors should adopt a cautious approach while closely monitoring upcoming triggers. Quantitative indicators suggest that volatility will persist in the short term unless strong positive catalysts emerge from either domestic or international developments.

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Disclaimer:

This article is for informational purposes only and should not be construed as financial advice or investment recommendations. Please consult with a certified financial advisor before making any investment decisions.