The decline of the stock market is increasing. Today, on January 21, it has closed with a decline for the third consecutive day. Sensex and Nifty now fell to their 4-month low. In such a situation, this is the big question. Will the stock market bounce back before the budget on February 1 or will the trend of decline continue? After all, why is the stock market under pressure? How strong are its support levels and what advice are experts giving to investors before the budget?
The stock market saw huge fluctuations today. During trading, at one time Sensex fell by 1,056 points and Nifty broke the psychological level of 25,000. But later the market recovered most of its losses due to buying at lower levels. Despite this, in the end the Sensex closed down by about 270 points and the Nifty also closed with weakness around 25,157. That is, it is clear that there was buying at lower levels, but the sentiment of investors still remains weak.
After all, what is the real reason for this fear of the stock market?
Market experts say that the biggest concerns of the market at this time are on three fronts. The first is global tension. Rising geopolitical tensions between the US and Europe, US President Donald Trump’s aggressive rhetoric regarding Greenland and fears of new tariffs have created a “risk-off” environment in global markets, driving investors away from the stock market.
The second concern is the continued selling by foreign investors. The selling by foreign institutional investors i.e. FIIs is not stopping for a long time. This has further weakened the movement of the Indian market. Since the beginning of the year, foreign investors have withdrawn more than Rs 32,000 crore from the Indian market. The rupee is also continuously weakening and is near record lows against the dollar. In such a situation, foreign investors are staying away from risk.
The third concern is the weak earnings season. Even on the earnings front, no big positive surprise has been received so far, which can strengthen the market. Results in IT, realty and some consumer segments have been weaker than expected, making investors more cautious than before.
Will there be a rise in the market before the budget?
Santosh Meena, head of research at Swastik Investment, believes that this decline before the budget is forcing investors to look for value rather than scaring them. According to him, in the current environment, instead of making aggressive bets, a balanced and defensive strategy can prove to be more effective.
He believes that the shares of big private banks have now reached such levels where valuations look more attractive compared to the historical average. Long-term investors may gradually find opportunities in names like HDFC Bank, Kotak Mahindra Bank and Federal Bank.
Along with this, he also advises not to ignore select PSU stocks. Santosh Meena believes that the structural story still remains strong in stocks like ONGC, Bharat Electronics and Hindustan Copper. Apart from this, he considers the FMCG sector as a “protective shield” of the portfolio, which can provide stable earnings and confidence even in volatile times.
On the movement of the stock market, Santosh Meena says that from the technical point of view the level of 25,000 has become very important for Nifty at this time. This is not just a figure, but the 200-day moving average of Nifty is also around this.
Meena says that if Nifty manages to stay above this level, then a technical recovery or a relief rally may be seen before the budget. But if this support level is broken decisively, the decline may extend to 24,900 or below. This means that the next few days can prove to be very important in deciding the direction of the market.
However, not all experts are so hopeful. Sunny Aggarwal, Head of Fundamental Research, SBI Securities, says that it is very difficult to predict the recovery of the market before the budget, because at this time global events are driving the market more than domestic factors. He says that the selling by foreign investors, the weakness of the rupee and the sharp rise in safe haven assets like gold and silver are indicating that investors are in no mood to take risks right now. In such a situation, even if there is a surge in the market, it may remain limited and weak.
Ajit Mishra of Religare Broking also shares a similar view. He says that the market condition has become technically weak after Nifty slipped below the 200-day average. If the pressure continues, Nifty may also test the level of 24,900. However, if the tension on the global front eases even a little, then a short-term relief rally can definitely be seen.
Overall, this is not the time to make big bets outright, but to invest through SIP and in a phased manner. If Nifty remains above 25,000, the market can heave a sigh of relief. But till then caution, balance and patience will remain the biggest weapons of investors.
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