The Nifty 50 index has surged past the 21,000 mark, marking a journey that unfolded over 61 sessions since it first breached the 20,000 mark on September 11, 2023. This thousand-point rally from 20,000 to 21,000 now stands as the 7th fastest rally in the major index’s history.
The Nifty 50 has witnessed several rallies, with the fastest being from 16,000 to 17,000, achieved in a mere 19 sessions. The recent surge from 20,000 to 21,000, although taking 61 sessions, signifies a robust upward trajectory. Historical data reveals noteworthy rallies, including the 5,000 to 6,000 points rally in 24 sessions and the 13,000 to 14,000 and 14,000 to 15,000 rallies, both achieved in 25 sessions each.
The journey from 17,000 to 18,000 took 28 trading sessions, while the climb from 19,000 to 20,000 required 52 trading sessions. Although the thousand-point rally from 19,000 to 20,000 could have been done in 15 sessions, the index staged a downturn after touching an all-time high of 19,991.
“The Nifty reached a new all-time high as the RBI Governor announced the monetary policy, surpassing the 21,000 mark. The RBI Governor maintained the key lending rates at 6.50%, a decision that had already been expected and factored in by the market participants. The upward revision of the real GDP growth projection for 2023-24 is anticipated to have a positive impact on the market. In the short term, the Nifty might see volatility; only a clear breakout above 21,000 could drive the index towards the range of 21,550-21,700. A critical support level is situated at 20,800,” said Rupak De, Senior Technical Analyst at LKP Securities.
Since the closing of November 24, the Nifty 50 index has seen gains of over 1,300 points, maintaining a winning streak for seven consecutive trading sessions. The last time such a streak occurred was back in September. The overall rise over the last nine trading sessions has amounted to a 6% increase, with 49 out of the 50 index constituents posting gains.
The Adani twins, Adani Enterprises and Adani Ports have emerged as the top performers during this surge. Public sector undertakings (PSUs) like BPCL, NTPC, Power Grid, and SBI have also secured positions among the top 10 Nifty 50 gainers since November 28. However, Divi’s Laboratories remains the sole underperformer among stocks over the last six trading sessions.
HDFC Bank took the lead among point contributors as it entered positive territory for the year. Sameet Chavan, Head of Research – Technical and Derivatives at Angel One Ltd, points out, “Nifty has encountered a crucial resistance point, with indicators in a high overbought zone.”
Chavan advises caution, indicating that the levels around 21,000-21,100 will likely pose a substantial hurdle in the near term. Despite the breather day for the bulls, the bullish undertone prevails, suggesting short-term corrections for a healthier bull trend. Support levels include the last two session lows of around 20,850 and key support at 20,700, with pivotal support for the trend lying in the major bullish gap between 20,500 and 20,300.
Global markets have also played a role in shaping investor sentiment. In the US, the Dow Jones Industrial Average and S&P 500 are on track to break their five-week winning streak, while the Nasdaq is poised for a sixth straight winning week. Investors have closely monitored job data, with the November nonfarm payrolls report eagerly anticipated.
The US 10-year Treasury yield has fluctuated, reflecting investor considerations about the labour market and the broader economy. In Europe, the Stoxx 600 index showed a 0.3% gain in early trade, with travel and leisure stocks leading gains.
The recent announcements by the Reserve Bank of India (RBI) are expected to positively influence the stock market. Sreeram Ramdas, Vice President of Green Portfolio PMS, highlights the stability provided by the decision to maintain the policy repo rate and continued focus on inflation targeting.
Ramdas emphasizes India’s strong economic fundamentals and GDP growth, predicting a growth rate of 7% for FY24 and FY25 with inflation under the 6% bar. Despite potential inflation due to higher food prices, the RBI remains focused on the medium-term outlook, showcasing India as an outlier in the global economic landscape.
“We’re convinced the rates are picking up and should continue to be heard for some time. The US Federal Reserve is expected to cut its interest rate around the middle of next year, and flows in JP Morgan’s bond index funds are scheduled to start before that. The yield on GSec should decrease by about 50-75 basis points as a result of both factors. We remain positive on long-term debt funds from a 1-2 year perspective,” stated Mukesh Kochar National Head of Wealth at AUM Capital
As markets remain range-bound, there is notable broad-based buying, presenting opportunities for traders to focus on thematic approaches. The stock market is poised to react positively to the RBI’s recent announcements, with a stable policy environment and strong economic indicators boosting investor confidence.
Despite challenges such as inflation control and potential supply-side shocks, the overall outlook is optimistic. Investors are encouraged to stay vigilant, considering technical resistance levels and global market dynamics. The steady momentum, coupled with a bullish undertone, paints a promising picture for the Indian stock market in the near term.
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