Sensex, Nifty trade flat, volatility likely to continue ahead of Budget 2024

Going ahead, analysts placed next resistance for Nifty at 22,000

Equity benchmarks the Sensex and the Nifty were trading lower on January 30 morning despite strong global cues, as volatility rose and investors hedged bets in the run-up to the Budget 2024.

Fear gauge the India VIX,  a measure of volatility expected over the next 30 days, spiked over 4 percent to hover at 16 levels, indicating that investors were turning cautious ahead of the 2024 Budget, which will be presented on February 1, and US Federal Reserve's rate meeting.

At 10.05 am, the Sensex was trading lower at 71,932 and the Nifty was flat at 21,760.

Analysts expect the Nifty to face resistance at 22,000. "Once breached, there is a possibility of Nifty testing the near all-time high of 22,124 levels," said Om Mehra, Technical Analyst, SAMCO Securities.

On the other hand, Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher, said that the crucial barrier zone of 21,750 needed to be breached to expect re-testing of all-time high level of 22,124 zone. "The support for the day is seen at 21,600, while resistance at 21,900," she added.

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Reliance Industries, which carries around 12 percent weightage in benchmarks Sensex and Nifty, slipped 0.5 percent on morning deals after contributing to almost a 38 percent surge in the Nifty market capitalisation in the previous session.

Analyst expect individual counters to play a pivotal role ahead of the budget, said Sameet Chavan, Head Research, Technical and Derivative - Angel One. "Traders are advised to focus on such opportunities for potential outperformance," he said.

Barring the Bank Nifty index, all sectors were trading higher. Nifty Media and metal indices led the pack with a gain of 1 percent each.

In the banking pack, PSU stocks were doing better than private lenders. Mandar Bhojane, Research Analyst at Choice Broking, said 45,110 serves would be a crucial support for Bank Nifty in the short term.

US Fed's rate decision eyed 

Globally, investors will watch out the US Federal Reserve's interest rate decision due January 31. Traders anticipate that US global central bank would offer a roadmap to interest rate cut trajectory.

"The Fed commentary on Wednesday will influence the US bond yields and consequently the FII strategy," said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Overnight, the US markets advanced ahead of mega-cap earnings reports and the rate decision.

Most Asian markets gained except Hong Kong's Hang Seng index, which fell as investors grappled from Evergrande's liquidation order.