After being too unpredictable for the last three to four weeks, the Indian stock markets have finally shown good breakouts. All major indices, including Nifty 50, Sensex, Bank Nifty, FINNIFTY, and MIDCPNIFTY, have crossed or are about to surpass their all-time high marks. This has resulted in a huge influx of investments from both domestic and foreign investors.
But a valid question that’s now worrying most stock market investors is whether the market can sustain such high levels, and what would be the next support and resistance points for indices?
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This article tries to answer all such questions. But before that, let’s learn in detail what stock market indices are, the top stock market indices in India, and why they are so crucial for investors. Keep reading.
The values of shares in the share market keep changing all the time. While some shares move upwards, some go downwards, and others remain neutral. The magnitude of the change for different shares also varies. So, how to measure this change cumulatively? The answer is through a stock market index.
The stock market index reflects the statistical measure of the daily changes in the prices of shares listed on the stock market. There are various stock market indices in India containing different groups of stocks. You will learn about them later in this article.
The top stock market indices in India include:
The Nifty 50 is a benchmark Indian stock market index representing the weighted average of the top 50 companies listed on the National Stock Exchange (NSE). These companies span twelve major sectors of the Indian economy, including Information Technology (IT), financial services, consumer goods, entertainment, metals, pharmaceuticals, telecommunications, automobiles, and energy.
The term Nifty 50 combines two words – the NSE and fifty. Some top companies listed under Nifty 50 include Tata Motors, Yes Bank, SBI, Bajaj Auto, Asian Paints, Tata Steel, and Coal India.
Bank Nifty is a sectoral Indian stock market index comprising only stocks belonging to the banking companies. These companies belong to India's 12 largest banking enterprises, including both public and private.
The top banks listed under Bank Nifty (as per their weightage) include the HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, State Bank of India (SBI), IndusInd Bank, Bandhan Bank, Federal Bank, IDFC FIRST Bank, and RBL Bank.
FINNIFTY is another sector of the Indian stock market index comprising top financial services companies in India. These include banks, Non-Banking Financial Corporations (NBFCs), and insurance companies. So, apart from some of the top banking companies mentioned above, the FINNIFTY index also includes stocks like Bajaj Finance, Bajaj Finserv, SBI Life Insurance, and ICICI Prudential.
Key levels for stock market indices are of great significance for investors looking to trade in the derivatives segment.
After breaching the magical 20,000 mark on 12 September 2023, the overall outlook for Nifty remains positive as there are no signs of trend reversal yet. The next resistance and support levels are 20,170 and 20,040. For the time being, the index can remain range-bound within these levels. However, if it breaches the 20,170 mark, it can move up to 20,230, the next resistance level. On the other hand, if the index goes below 20,040, it can fall to 19,970, which would be the next support level.
Bank Nifty is currently trading at 45,979.85 (as of 18 September 2023). The resistance level is at 46,170; upon breaching this mark, the index can move up to 46,340. On the other hand, the support level is at 45,820, and if the index goes below this mark, it can fall to 45,630.
FINNIFTY is currently trading at 20,408.25 (as of 18 September 2023). The resistance level is at 20,480; upon breaching this mark, the index can go up to 20,540. The support level is at 20,330; if the index goes below this mark, it can fall to 20,260.
At such high levels, you must proceed cautiously. Try trading with limited volume and wait till the market gains more stability. If you need a Demat account to invest, you can open it for free with Motilal Oswal.