Market Indices Nifty & Sensex Before the Budget

The primary Indian indices Nifty & Sensex have headed lower & lower over the past 11 months & with the budget looming around the corner, investor expectations are high & so are their fears. So what better a time to take a look at the future prospects of the primary market indices.

Let's take a short look at how the Nifty got to where it is now. The indices bottomed in 2009 followed by a rally & then were stuck in a dragged out sideways zone for three years, from January 2011 to January 2014 (as marked in the Monthly chart at the bottom of this post). Followed by an enthusiastic bull run throughout 2014, with the Nifty touching life-time highs of 9100. But soon after failing to move above a critical resistance of 8997 in January 2015, it began to weaken. Though not yet a bear signal, it did show us that the market might weaken or go sideways. This however changed over the next six months.& finally during the first week of July 2015 the market did signal an end of the bull run, as marked in the weekly chart above.

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The Nifty has since been in a bear phase for the last 11 months & is showing no respite yet for the bulls, even after seeing the Nifty loose 2000 points from it's life-time highs. We see the Nifty heading towards it's next support at 6665 & if the market goes below this we will see it head towards a further stronger support at 6200. The probability of the indices going below 6200 is very unlikely, as the 3 year sideways price action (as indicated in the monthly chart) has established a very strong base for the markets, breaking such a price level would require catastrophic global events. It would be wise of investors to look for indications of base formation & bottoming around 6200, for profitable long term investment opportunities.

Long term supports & resistances for investors (also marked on the weekly chart above) :
Supports - 6665 & 6200
Resistances - 7441, 8329-8416 (zone), 8892

Short term supports & resistances for traders (also market on the daily chart below) :
Supports - 7150, 7077, 6869
Resistances - 7510, 7363, 7260