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Business News/ Markets / Stock Markets/  Is Nifty 50 poised to drop to 22,000 before Lok Sabha election result? Here's what 11 experts say
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Is Nifty 50 poised to drop to 22,000 before Lok Sabha election result? Here's what 11 experts say

Experts predict Nifty 50 may test support at 22,650 and 22,400 levels before Lok Sabha election results, with cautious bullish trends.

The Nifty 50 hit a fresh all-time high of 23,110.80 in intraday trade on May 27 but failed to hold gains thereafter. (Image: Pixabay) (Pixabay)Premium
The Nifty 50 hit a fresh all-time high of 23,110.80 in intraday trade on May 27 but failed to hold gains thereafter. (Image: Pixabay) (Pixabay)

Nifty 50, the benchmark of the Indian stock market, fell almost 1 per cent on Wednesday, May 29, to end at 22,704.70, marking its fourth consecutive day of losses.

The Nifty 50 hit a fresh all-time high of 23,110.80 in intraday trade on May 27 but failed to hold gains thereafter. The index is currently down 1.8 per cent from its all-time high, thanks to Lok Sabha election-related nervousness, weak global cues, waning expectations of rate cuts, and significant foreign capital outflow.

Also Read: Sensex, Nifty 50 fall almost 1% each; why did the Indian stock market fall today?- explained

The Indian stock market is expected to remain volatile until the Lok Sabha election results on June 4. Will this volatility drag the index below the 22,000 mark before the election result? How much more pain is in the offing?

Mint collated the views of 10 experts to understand how the Nifty 50 may move in the next few days. Here's what they said:

Deepak Jasani, Head of Retail Research at HDFC Securities

If the current downturn continues, the Nifty 50 could see the level of 22,520 before the exit poll results are out.

Ruchit Jain, Lead Research, 5paisa.com

Nifty 50 has resisted near the trendline's higher end, coinciding with the retracement hurdle. Also, the market has rallied ahead of the event, and India VIX continues to inch higher (now at 24), which may be leading to nervousness and, hence, some profit booking. 

However, the overall trend remains positive, as the FIIs have covered the short positions, the index is trading above its key moving average supports, and the RSI on the daily chart is positive. 

“The immediate supports for Nifty are placed around 22,650, followed by the 22,500-22,450 range. On the higher side, the hurdle is around 23,100; once surpassed, the index could continue the uptrend towards 23,400," said Jain. 

Also Read: Lok Sabha Elections 2024 trading strategy: Largecaps or midcaps – what should you bet on?

Shrikant Chouhan, Head Equity Research, Kotak Securities

On intraday charts, the market is holding a lower top formation, which indicates further weakness from the current levels. 

“For the day traders, 22,800/74,800 would be a trend decider level. The correction formation is likely to continue below the same. Below it, the market could slip to 22,650-22,600/74,300-74,100," said Chouhan. 

“On the flip side, above 22,800/74,800, the sentiment could change. Above that, we could expect one technical bounce back to 22,900-22,950/75,000-75,300," Chouhan said.

Also Read: Is the Indian stock market fairly valued or overvalued? Experts weigh in

Vijay Laxmi A Ambala, a SEBI-registered research analyst

“Given the Nifty 50 has plunged by 2 per cent from its record high, the index is likely to test the 22,650 and 22,400 levels before the last phase of the Lok Sabha elections," said Ambala. 

Currently, Nifty's Relative Strength Indicator (RSI) reading stands at 64 on the weekly and 75 on the monthly timeframe, suggesting an inclination towards bullish trends in the broader timeframe. 

The Nifty 50 index also trades nearly 11 per cent away from its 20-day exponential moving average (EMA) on the monthly timeframe, suggesting a downward trend induced by steadily increasing selling pressure. 

Typically, such divergences tend to get quickly filled, but this time, the percentage could be lower if the prevailing trend in the broader market displays bullish tendencies. 

If Nifty fails to sustain itself above the 22,380 range, more selling activities could be triggered, especially due to the stock market's current overbought conditions. 

Such a situation could fuel a sense of uncertainty among investors and traders, who may benefit from adopting the wait-and-watch strategy. 

Also Read: Lok Sabha elections 2024 trading: Kripashankar Maurya of Choice Broking recommends buying these 7 stocks for short term

Ajit Mishra, SVP- Research, Religare Broking

“The recent decline signals caution among investors, and we anticipate Nifty finding support around the 22,550 level, which corresponds to the 20-day EMA," said Mishra. 

“With the May derivatives contracts expiry approaching, volatility is expected to remain high. We recommend limiting aggressive long positions and adopting a hedged approach," Mishra said.

Rupak De, Senior Technical Analyst, LKP Securities

During the day, heavy Call writing activities were seen at the 23,000 and 22,800 strikes, while put writing activities were visible at the 22,800 and 22,700 strikes. 

“The option data suggests that Nifty might expire around 22,800. On the other hand, a fall below 22,700 might trigger additional selling pressure in the market. Immediate resistance is placed at 22,800," said De.

Also Read: Wait for Lok Sabha election 2024 outcome to keep market volatile; experts recommend buying these 6 stocks for short-term

Rahul Ghose, CEO, Hedged.in

“The correction in the Nifty 50 happening is a minor speed bump in the scheme of things. The bottom point for this correction can be a maximum of 22,400 as there is Put writing at the 22,500 mark," said Ghose. 

Ghose expects the Nifty to cross 22,900 before the election results day. 

“This is further corroborated by the fact that the highest concentration of positions on the index are the short straddles created at the 23,000 level. Hence, a big movement on the downside before the election results day is unlikely to happen or be sustained," said Ghose.

Om Mehra, Technical Analyst, SAMCO Securities

Despite peaking above the 23,000 mark intra-day on several occasions, the Nifty 50 has struggled to close above this crucial level. 

Today's gap-down opening has encountered strong resistance within the unfilled gap. 

With only three trading sessions left ahead of the June 4 Lok Sabha election results and the continuous rise of the India VIX, the market's fear gauge indicates increasing uncertainty. 

The Nifty is sustaining above its 20-day moving average (DMA) but has recently broken below its 23.6 per cent retracement support at 22,800. 

“If the index slips below 22,680, it could push towards 22,500, followed by 22,300 in the upcoming sessions. The Nifty is expected to oscillate in a broader range before the key event," said Mehra.

Tejas Shah, Technical Research, JM Financial & BlinkX

“Some pullback from time to time is good for the ongoing uptrend. The broader set-up continues to be bullish; hence, after some consolidation and correction, we should see more upside," said Shah. 

The short-term moving averages are just below the price action and should continue to support the indices on any decline. 

Support for the Nifty is now seen at 22,675-700 and 22,500 levels. On the higher side, the immediate resistance zone is at 22,825-850 levels, and the next psychological resistance is at 23,000 Mark.

Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas

On the daily charts, the Nifty 50 is retracing its rise between 22,054 and 23,111. 

The 38.2 per cent Fibonacci retracement level is placed at 22,707. 

“We expect the Nifty to recover over the next few trading sessions. We believe this is a minor degree correction and not a trend reversal," said Gedia.

Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One

The Nifty has breached the neckline of the recent breakout and is now heading towards the mean of the rising channel at 22,600, followed by the 20-day EMA at 22,500, considered the crucial support level. 

On the higher end, the bearish gap of 22,825-22,860 is seen as an intermediate hurdle, while the sturdy wall stays at the 23,000 mark.

Read all market-related news here

Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.

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Published: 29 May 2024, 05:27 PM IST
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