Nifty – Approaching Support Zone Ahead of the Budget
Nifty has witnessed a 5.5% (~1,500-point) correction over the last three weeks. Meanwhile, India VIX has surged 51% since the beginning of the month and currently stands at 14.19, highlighting rising market volatility.
This correction aligns with historical seasonality, as January has been a negative month for the Nifty over the past seven years.
The key question now is: Where is the Nifty headed next, and which levels matter in the near term? The answer lies in the monthly charts.
All intermediate corrections since 2020 have found support around the 20-month Simple Moving Average (SMA). Currently, this level stands at 24,634, which implies a potential ~2% downside from current levels.
Key Levels to Watch
Support Zone: 24,634 – 24,500
Resistance Zone: 25,650 – 25,700
On the upside, the Nifty needs to sustain above the 25,650–25,700 zone to negate the lower high–lower low formation and signal a reversal in the short-term trend.
A positive takeaway is that the index is approaching its crucial support zone ahead of the Union Budget. The FII Index Long-Short Ratio stands at just 11% long, which leaves room for an aggressive upside reaction if the Budget delivers a positive trigger.
Near-Term Risks
Depreciating rupee
Continued FII cash market selling
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