Nifty 50 Rebounds at 25,200 Level After a Strong Week -

The Indian market has been on a high which also saw Nifty 50 do well. After a week of gain we see Nifty is at a crossroads at the 25,200 level which is a tough barrier for the market to overcome.

In this blog we will go over what is going on with the Nifty 50, which 25,200 level is key, what to expect moving forward, also we will put forth what you as an investor or trader should be aware of.

Here we are, a quick look back at the week.

The Nifty 50 began the week at 24,800 points and saw a steady climb the whole week.
By the end of the week it reached almost 25,150 points which is a 2% gain — that’s very good.

This for a number of reasons we saw performance improve.

Good Earnings: Many large companies which include banks, IT firms, and consumer products’ producers reported out their QTR results which in turn were better than what the market had expected which in turn gave us a boost in confidence.
Foreign Money Coming In: Foreign investors which often play a large role in our markets put money into Indian stocks which in turn saw prices go up.
Stable Economy: Recent reports which put the Indian economy in the spotlight show that it is doing well with steady growth and inflation under control.
Global Market Help: Other global markets had a rebound from a rough patch which in turn made Indian markets take on a more positive tone.

What is the significance of 25,200?

In the stock market a “resistance level” is a ceiling which prices have difficulty looking past. We are at that stage with the Nifty at the 25,200 level. Also note how this plays out:

Past Struggles: The Nifty has attempted to go over this level a few times but has not been able to stay above it. What we see is that at this point many investors are putting in sell orders to book profit.
Round Number Effect: People tend to put in large buy or sell orders at what are known as round numbers like 25,000 or 25,200. These numbers are easy to remember and become psychological barriers.
Market Might Be Overheated: Some technical tools used by traders — like the RSI (Relative Strength Index) — report that the market is at a bit of a top, which means it has gone up too far too fast and may correct soon.
Less Buying Power: As we approach 25,200 in the market the volume of sales is decreasing which may mean that buyers are losing interest.

What Could Happen Next? Two Possibilities

In the case of market resistance we see usually play out in one of two ways:

It Overcomes the Resistance.

If the buying action is strong we may see Nifty break past 25,200 and continue to go up. That would a signal of investors confidence and they will push prices up.
After a break out like that which is expected, we may see next targets at 25,500 or even beyond.
For that to play out we will see great buying action and the index closing at over 25,200 for several days in a row.

It Dies Out or Fails to take off.

If which is the case that sellers take over the market may pull back a little or may just see a range bound action for some time.
In that which is the Nifty it may drop to support levels at 24,800 or 24,600 and trade there as it “catches its breath.”
Such a break isn’t always negative; it may see the market cool down which in turn gives new buyers an opportunity to get in at more attractive prices.

What is the issue that will move the market?

In many cases what will happen next is that:

Global Economy: If global central banks which includes that of the US do raise interest rates or if we see an increase in geopolitical tension, investors may react out of concern and pull back.
Indian Economy: Important issues of inflation, industrial growth, or government spending will also play into market sentiment.
Corporate Earnings: While the earnings season is in progress if more companies report strong profit results that may sustain the rally.
Foreign Investors: If overseas investors continue to put money in India we will see the market go up. Should they begin to pull out we may see a drop.

What is your best action as an investor or trader?

Here is a guide based on your style:

For Long-Term Investors
- Don’t worry when the market corrects a little from this point.
- Use what we see as dips to purchase quality stocks at what may be better prices.
- Also keep in mind that the Indian economy is still very strong and many of our companies have great growth prospects.
- Diversify your investment and go for companies which report stable earnings and strong balance sheets.
For Traders
- Watch out for the 25,200 level.
- Should the Nifty break above it with high volume that will be a good sign to get in for a short term trade.
- But should it fail and reverse, it may be best to book what you have or use stop loss orders to protect your gains.
- Watch out for moving averages and RSI in your decision making.

Final Thoughts

After a great performance for the week the Nifty 50 is at a key level of 25,200 now. What we see it do from here out will be a play of both global and domestic factors.

Whatever will be, keeping up with the news, paying attention to key players, and having a solid plan is what works best in the market.

Disclaimer

This is an info only blog we do not provide financial advice. The stock market is a risky place and past performance does not predict the future. It is very important that you do your own research, which is in this case, the best policy and also to seek out a certified financial advisor for personalized recommendations.