The Indian equity markets began the new week on a powerful note, with the benchmark Nifty 50 index scaling a fresh all-time peak during Monday's opening session. This surge was propelled by the release of impressive GDP figures for the country, which significantly lifted investor morale and amplified speculation about a potential interest rate reduction by the Reserve Bank of India.
Market Opens at Record Levels, Then Pares Gains
Reflecting the bullish sentiment, the Nifty 50 index opened at a historic high of 26,325.80, marking a sharp gain of 122.85 points or 0.47%. Similarly, the Sensex commenced trading at 86,065.92, up by 359.25 points or 0.42%. This rally followed the indices achieving new lifetime highs just last Thursday.
However, the momentum moderated as the session progressed. By afternoon, the indices had surrendered their early gains and were trading flat. As of 1:58 PM IST, the Nifty 50 was down 0.07% at 26,185.20, while the Sensex had dipped 0.06% to 85,654.49.
Analysts Bullish on Trend, Eye Further Upside
Market experts believe the stellar GDP numbers have provided a solid foundation for the market's uptrend. Vinay Rajani, Senior Technical and Derivative Analyst at HDFC Securities, noted that the robust economic data has increased the probability of the RBI considering a 25 basis points rate cut in its forthcoming monetary policy review.
Rajani provided a detailed technical outlook, stating that the Nifty 50 has been forming higher tops and higher bottoms on daily and weekly charts, confirming a bullish trend as per Dow Theory. The index is trading above all key moving averages, with a bullish alignment where the 20-day EMA is above the 50-day EMA, which in turn is above the 100 and 200-day EMAs.
He highlighted that the index has broken out from a long-term downward sloping trend line on weekly and monthly charts, projecting healthy upside from current levels. The immediate target for Nifty 50 is seen near 26,600, with a farther resistance zone around 27,000. The previous swing low of 25,842 is expected to act as a crucial support.
Sectoral Performance and Broader Market Outlook
Rajani pointed out that the Bank Nifty has been outperforming the main index, with potential targets of 60,141 and 61,695, and support at 58,650. He anticipates that the Healthcare and Auto sectors are likely to outperform in the coming weeks.
However, participation from the broader market remains relatively low compared to large-cap stocks. The Nifty 500 Index is facing resistance at previous swing tops, and a couple of percentage gains could trigger a breakout, leading to a much-awaited rise in momentum for mid and small-cap stocks. Currently, the Nifty Smallcap100 and Microcap250 indices are in a consolidation phase, lacking clear trend momentum. Ratio charts suggest that large-cap stocks will continue to outperform their smaller counterparts.
Investment Strategy and Stock Recommendations
For traders, the strategy is to stay with the uptrend. Rajani advises accumulating long positions and using dips to re-enter. Long positions can be held with a stop-loss at 25,842 on a closing basis; a breach below this level would violate the bullish structure.
The analyst also shared specific stock picks:
Kotak Mahindra Bank (₹2,150): The stock appears to have broken out from recent consolidation with a jump in volumes. The primary trend is bullish as it trades above key moving averages, supported by the outperforming Bank index. The target is ₹2,340 with a stop-loss at ₹1,990.
Indian Bank (₹884): This PSU bank stock is on the verge of breaking out from a four-week consolidation phase. It is placed above key moving averages, with oscillators showing strength. The target is ₹942 with a stop-loss at ₹855.
Disclaimer: The views and recommendations are those of individual analysts and not of Mint. Investors are advised to consult certified experts before making any investment decisions.
