MARKET OVERVIEW :

Currency Market Overview February 19, 2024

Indian stock market: Why Nifty 50 index may touch record high this week — explained with 5 reasons

Experts see Nifty 50 index at a new peak this week on these five factors — Lok Sabha elections 2024, strong global cues, FII DII data, ample liquidity, participatory rally in PSUs and banking shares Experts foresee Nifty 50 index breaking above 22,125 level this week. Pre-poll surveys suggest BJP-led NDA to secure a majority in 2024 elections.

FIIs shifting to cash segment. Indian stock market extended the bull run on Friday and ended higher for the fourth straight session. The Nifty 50 index sustained above its crucial support of 21,800 and decisively breached the hurdle placed at the 22,000 mark. According to stock market experts, the 50-stock index is now facing resistance at the 22,125 mark and a fresh bull trend can be expected once the 50-stock index gives a breakout above the 22,125 level on a closing basis.

They said that the breakout would mean the Nifty 50 index touching a new high to the tune of 22,400 and 22,800 levels respectively in the short term. Expecting the Nifty 50 index to give a decisive breakout above 22,125 levels this week itself, stock market experts said that two media houses — India Today and Times Now — recently conducted a pre-poll survey and came out with the findings that BJP-led NDA would get a comfortable majority in upcoming Lok Sabha elections 2024. They also revealed that FIIs are switching positions from F&O to the cash segment which also augurs well for the further extension of the bull trend.

Will Nifty 50 climb to a new peak?

On whether the Nifty 50 climb to a new lifetime high this week, the Indian stock market experts listed out the following 5 triggers that may continue to fuel the bull trend on Dalal Street:

1] Lok Sabha elections 2024: “We expect market sentiment to strengthen further as the prospect of a pre-election rally is quite strong. Two important pre-poll surveys by India Today and Times Now predict a more than comfortable majority (272+ seats) for the incumbent BJP-led NDA. Nifty is hovering near all-time zones and is all set to make new highs next week,”

2] Strong global market cues: “Shares advanced in Europe and Asia on Friday after stocks on Wall Street set a fresh record following mixed reports on the state of the US economy. Hopes of imminent rate cuts by the European Central Bank and a decline in bond yields lifted investors’ appetite for risky assets.

3] FII DII data: “In the last seven sessions (till Friday last week), FIIs have remained net buyers on four sessions in the cash segment while in the F&O segment, they have remained net buyers on four sessions. However, DIIs have remained net sellers in the F&O segment in six out of seven last sessions while they remained net buyers in the cash segment in six out of seven sessions. This means DIIs are switching from short to long positions while FIIs are also looking forward to this trade practice. If FIIs repeat the same pattern, then chances are very strong that the Indian stock market witness a fresh bull trend this week,” said Sandeep Pandey, Founder of Basav Capital.

4] Ample liquidity: “After the soft Indian inflation data, the market is expecting a rate cut from the Reserve Bank of India (RBI) in the near term. At least, a signal or timeline for rate cust is something that market observers are expecting in the next RBI meeting. This is expected to fuel liquidity in the market as lowering of interest rate may lead to more availability of the money in the markets,” said Sandeep Pandey.

5] Participatory rally: “After a strong sell-off in the Indian PSUs and banking shares last week, we are witnessing bottom fishing in these stocks in the current rally, which means the PSU theme is still under the radar of stock market bulls. Apart from this, small-cap and mid-cap indices are still dominating over the key benchmark indices, which means the recent rally is across segments and it is going to sustain,”

Indian stock market: Nifty 50 outlook

On the outlook for the Nifty 50 index, “The Nifty 50 index gained further with a gap up opening and once again breached above the 22,000 zone and sustained the levels with bias maintained strong expecting to retest the previous peak levels in the coming sessions.

The index would have the 21,800 level as the important support zone and can expect for higher targets of 22,400 and 22,800 levels once a decisive breakout above the previous peak level is confirmed.