What is meant by support level of the index (SENSEX/NIFTY) in the indian stock market?
Support levels refer to charts of any index, market, stock, commodity or currency. You look at a chart, and the lows are the support level. If the index breaks the support level, it makes a new low. If it hits a low twice, that is called a double bottom. If it hits the same low three times, that is called a triple bottom. You should google stock charts and you can get a lot of information on how to chart the indexes. Those that practice charting are technical traders. Those that analyze companies for credit worthiness, profits, etc., are called fundamentals traders. A lot of people use a combination of both technical and fundamentals to decide what stocks or indexes to invest in. I hope this explanation helps.
Support is said to be a level, where DEMAND is strong enough to prevent price from declining further. As you may know, StocK Prices are a matter of demand and Supply, When supply > demand – price falls. When demand > Supply – Price rises If at a particular point the stock of Company X falls to Rs 90. Assume never had it fallen to this level before. In that case, Rs 90/- becomes a Support Level. In future, each time the stock of X falls, investors will check how far it falls. Till such time to fall is above to 90 level, the sentiment is that Demand will help the stock to recover in future ( despite the fall). However, if it breaches the 90/- mark, that means a new support level has formed. In this case, a bearish mood sets in. Supply is said to overpower demand, when Support Level is broken. Since Sensex and Nifty are cumulative indicators of share market movement, they too have support levels. Their lowest levels till date are their support levels.
