Long Term Nifty Analysis.(With Economic Commentary). We saw phenomenal resistance by Indian markets today after the Tariff announcements. Nifty bounced back and at one point was 330 points above low of the day. However there was Profit booking and selling on bounce due to prevailing Tariff uncertainties and Nifty came of the peak to close at 24768. Even after losing a lot of ground which it gained it ended up 133 points from the low of the day. Nifty ended the day in the negative losing 87.6 points from yesterday's close. This was much better than estimation of many experts. We might not be out of the woods yet but nevertheless fight back was phenomenal.
Now coming to Tariffs. I am not an expert in economy but let us assume the worst case scenario that trade negotiations fail and this is the tariff stays at 25% + Penalty. Again assuming that we loose 50% of our exports to US due to this decision. Say tariff would apply to 50b worth goods exported by us to USA and we 25b worth business. The impact on GDP will be as under.
GDP Impact = 25b/3.7T= 0.0067 = 0.67% of our GDP will be shaved off..(Rough Estimate). So say our is say 6.5. Then we continue to grow at 5.9 or 5.8. (Again I am not an expert and this estimate is based on a lot of assumption). This loss of GDP can be covered by increasing local consumption or exploring other market. Enhancing ties with markets outside USA. Thus it is not something which is going to kill Indian markets. We survived 1991, We survived Covid, We survived, Ukraine - Russia war, Israel-Iran conflict, Operation Sindoor Lows so we will survive this too and continue thriving. India is destined to become 3rd Largest Economy and unless there are local / internal political mishaps or mess-ups our growth will continue.
Fibonacci retracement of Nifty ant trend line analysis suggests few important support and resistance levels. The Horizontal line in the chart here suggests the cut off date. The chart suggests that:
Important Supports for Nifty remain at: 24406 (Mid Trend Support), 23903 (Important Fibonacci Support), 23345 (Important Candle support), (Below 23345 Nifty becomes very week and we will be in Bear grip where bears can drag Nifty down to 22737 or even 21742 in unlikely circumstances).
Important Resistance Levels: 25233 (Important Fibonacci resistance), 25792 (Important Candle resistance), 26277 (Previous All Time high), In the long term we might reach 27666 or even 29540 in close to 24 months time.
Conclusion:
Scenario 1) Indian Growth story continues and business thrive the optimistic range for Nifty by June 2027 seems to be the range between 26277 to 29540 or above.
Scenario 2) Indian economy faces changes and internal / external issues hamper progress the pessimistic range for Nifty by June 2027 seems to be anywhere between 23090 to 26277.
Scenario 3) Local or Global catastrophic events unfurl. Global and Indian economy takes a hit (Long drawn wars or local political leadership changes, Covid like events etc.) during this time frame 23090 to 21743 or below..(This does not seem likely but you never say never).
Disclaimer: The above information is provided for educational purpose, analysis and paper trading only. Please don't treat this as a buy or sell recommendation for the stock or index. The Techno-Funda analysis is based on data that is more than 3 months old. Supports and Resistances are determined by historic past peaks and Valley in the chart. Many other indicators and patterns like EMA, RSI, MACD, Volumes, Fibonacci, parallel channel etc. use historic data which is 3 months or older cyclical points. There is no guarantee they will work in future as markets are highly volatile and swings in prices are also due to macro and micro factors based on actions taken by the company as well as region and global events. Equity investment is subject to risks. I or my clients or family members might have positions in the stocks that we mention in our educational posts. We will not be responsible for any Profit or loss that may occur due to any financial decision taken based on any data provided in this message. Do consult your investment advisor before taking any financial decisions. Stop losses should be an important part of any investment in equity.
