Where is market headed ahead of Budget 2022? 18,350-18,400 eyed on Nifty; here’s why

The Indian markets rallied 2.5 per cent for the week that ended on January 14, and over 5 per cent in the run-up to the main event – Budget 2022 which most experts feel will be a pro-growth one.

Finance Minister Nirmala Sitharaman will present the Union Budget for the financial year 2022-23 on February 1, Tuesday.

In the run-up to the main event, the Nifty50 has already rallied over 900 points in the first 15 days despite muted global cues, rise in Omicron cases, and inflations which raised concerns over a possible hike by the Reserve Bank of India (RBI) in near future.

The Nifty50 which closed above 18250 for the week ended January 14 could face some hurdle near 18350-18400 levels, but dips if any, should be used as a buying opportunity.

Sectorally, last week's action was centered around sectors like power, utilities, capital goods, infra, as well as realty that could benefit the most from upcoming Budget decisions.

“The pre-budget move has started in many pockets and that is likely to continue in next week as well. If we look at the trend of last three years, then Market starts to correct between 15-20th January then we see a big post-budget rally in the market. It will be interesting to see how the market will approach Budget 2022,” Santosh Meena, Head of Research, Swastika Investmart Ltd, said.

Also Read: Budget 2022 Expectations: 'Budget is likely to remain growth-focused; fiscal deficit is likely to remain high for next year'

Covid cases are rising but the market is complacent about Covid cases as the hospitalization and mortality rate is very low.

Although December quarter earnings started on a strong note but progress of earnings season and management commentary will dictate the trend on D-Street.  

“Markets have made remarkable progress in the last one month and now inching closer to a record high. While we have mixed indications from the global markets, we believe earnings would dictate the market trend ahead,” Ajit Mishra, VP Research. Religare Broking, said.

“Among the other events and data, expectations around the Union Budget have started triggering noticeable moves across the board,” he said.

The earnings season would gain pace next week and participants will be closely eyeing the results of some of the top names like Reliance, ICICI Bank, Ultratech Cement, Bajaj Auto, JSW Steel, Bajaj Finance, Asian Paints, Hindustan Unilever among others.

Technical Outlook:

The Nifty50 closed with gains of over 2.5 per cent for the week ended January 14. Post a decline in October to December, the Nifty had taken support near the junction of the 40-week exponential moving average & the weekly lower Bollinger Band.

The two in combination generally act as a good support zone & the same was observed in this case as well. Thereon the index started a fresh rally and has done deep retracement of the entire decline.

On Friday, the index witnessed a bearish development on the daily chart, which can lead to a short-term consolidation, but the trend seems to be on the upside.

“On the daily chart, the Nifty has recently formed a Dragonfly Doji pattern, which suggests that the rally is running out of steam from a short-term perspective. The hourly momentum indicator is showing negative divergence near the overbought zone, which also shows loss of momentum on the upside,” Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas, said.

“Thus, a short-term consolidation is on the cards. On the downside, a recent gap area of 18081-18128 is a near-term support zone. If that is breached then there can be a deep cut towards 17700. On the higher side, 18400 will pose as a near-term hurdle,” he said.

The global markets witnessed some correction which led to a marginal negative opening for our markets on Friday. The Nifty50 index has strong support near the 18000 mark.

In the last couple of sessions, the banking index has shown a pullback to retrace some of the recent gains, but the overall trend has continued to be positive.

“One should continue to trade with a positive bias and trade with a buy-on-dip approach in this week. With the rise in index levels, the option writers are continuously focused on writing higher strike price put options and now, 18000 put option has attracted maximum open interest,” Ruchit Jain, Lead – Research, 5paisa.com, said.

“This indicates that the support base for the short term is now around the 18000 mark and any dip towards this support should be used as a buying opportunity,” he said.

Jain further added that on the higher side 18400-18500 would be the immediate range to look out for. In the banking index, 38000 and 37700 are the immediate supports.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)