The markets continue to be under pressure. The Indices opened in the green but soon took a turn for the worse and the Nifty has now slipped below the key support zone of 23000 for the second day in a row. FII selling continues and while US-India targetting to double bilateral trade by 2030 offers some sentiment respite, investors are worried about the longer term fundamentals like weak earnings and slow industrial production.
Shrikant Chouhan, Head Equity Research, Kotak Securities said, “We believe the current market structure is volatile and non-directional, making level-based trading an ideal strategy for day traders. In the near term, 23200/76500 and 23250/76750 could be key resistance zones for the bulls, while 22950/76000 and 22,800/75400 would be key support zones. However, if the market drops below 22,800/75400, the sentiment might change, and traders may prefer to exit long positions. The strategy should be to reduce weak long positions around 23200 levels. For short term traders buy or protect long positions of indices with a stop loss at 22950.”
1. FII selling continues
The FII selling continues. Foreign investors have sold over Rs 24,000 crore worth equities in Indian markets so far. This is over Rs 10,000 crore more than what FIIs sold in December 2024. As a result, the sentiment is quite discouraging. Overall, FIIs have sold more than Rs 1 lakh crore in Indian markets so far. The bulk, Rs 87,000 crore was sold in January, making it one of the worst monthly outflows in any month historically.
ALSO READWhen will the FII Selling Stop? Nilesh Shah of Kotak AMC answers… 2. Dollar drama continues
One of the key reasons FII selling continues is because of the dollar’s strength. According to analysts, 104 on the Dollar Index is a key level to watch. They believe that any turn in tide, in terms of potential reversal of FII selling, can only happen when the dollar shows any sign of stabilising if not weakening against the rupee. The continues dollar strength is supporting allocation of FII money in US markets Vs EM basket.
3. Earnings a major worry
The Q3 earnings season was hardly any encouragement. Though muted earnings were priced in, the miss on Q3 numbers led to widespread disappointment across the street. Though earnings pain may continue for a few quarter,
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