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Informist, Tuesday, Feb. 18, 2025

By Akash Mandal

MUMBAI – Benchmark indices are expected to be range-bound on Wednesday with a positive bias. The Nifty 50, despite falling intra-day during the last three sessions, has been able to recover and maintain its support of 22800 points, which is a positive sign, analysts said. However, there are no fundamentally positive near-term triggers in favour of the bulls that could help the market make a meaningful recovery. The major concerns remain expensive valuations despite at least three months of bear run, lower-than-expected earnings growth, fears of a slowdown in rate cuts in the US, and foreign outflows.   

With heavy outflows from foreign investors, any deterioration in retail investment sentiment may remove an important support for the Indian market. Retail investors have been buoyed by the high returns at multiple price points between 2020-21 (Apr-Mar) and FY24 when the market went through a boom, Kotak Institutional Equities said in its strategy report. "It would be interesting to see if non-institutional investors remain as bullish as they have been in the past few years or panic based on low and negative near-term trailing returns," Kotak said. 

While the overall market is expected to be in a tight range, information technology stocks are expected to rise more Wednesday. The near-term headwinds for the sector--such as delayed decision-making by clients due to the US elections, holiday-season furloughs, and cautious spending--are slowly subsiding, painting a positive picture for the sector, Nirmal Bang Institutional Equities said in a report. The sector is expected to report better earnings for FY26 and FY27 on recovery in discretionary spending in the banking and financial services segment. Shares of IT companies, which ended Tuesday as the top gainers, look positive on technical charts, technical and derivatives analysts said. 

Amid the current bearishness in the overall market, benchmark indices closed slightly lower Tuesday after snapping an eight-day losing run Monday. The Nifty 50 ended at 22945.30 points, down 14.20 points or 0.1%, and the BSE Sensex closed at 75967.39 points, down 29.47 points. The Nifty 50 and the Sensex had fallen as low as 0.7% earlier in the session. Broader market indices were mixed, with midcap indices closing flat-to-down, while smallcap indices ended sharply over 1% lower.

The Nifty 50 might see some more bounce-back, but will largely be sideways, Vipin Kumar, senior technical and derivatives analyst at Globe Capital Market, said. Till the Nifty 50 is holding near its support of 22800 points, it is expected to consolidate, Kumar said. However, the index needs to sustain over 23250 points for any gains to sustain, the analyst said.  

Despite the Nifty 50 breaking its Jan. 27 low of 22786.90 points on Monday and Friday, the index has shown the strength to hold near its support of 22800 points, Brijesh Ail, head of technical and derivatives at IDBI Capital Markets & Securities, said. While it is too early to predict a direction for the index, investors will get cautious if the index ends below 22800 points at the end of the week, Ail said. He also said the index may even fall to 22500 points if the key support level is breached. The analyst pegged the resistance for the index at 23100 points. 

Now, investors wait for a series of economic data on the global front, including the UK's inflation and producer prices for January, both due Wednesday during market hours. They also wait for the minutes of the US Federal Reserve and the Reserve Bank of India's latest policy meeting, due Thursday and Friday, respectively. These minutes are expected to give clues about the apex banks' future interest rate trajectory.  End

Edited by Saji George Titus

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