The latest bull run, fuelled by the 50 bps interest rate cut by the US Federal Reserve, is expected to push Indian equity market benchmarks - NSE Nifty and BSE Sensex - to newer milestones. Market experts believe that if the current optimism prevails, the Nifty index may soon conquer the 26,000 mark and even go as high as 26,200 level.
“Technically, the index is oscillating within a rising channel and is trading near the upper trend line resistance of the channel pattern, which is around 25,900-26,000 levels, making them a strong hurdle in the short term. Therefore, on the upside, 26,000 will act as an immediate hurdle for Nifty. If the index sustains above 26,000 it could test the 26,200 levels. On the downside, 25,600 will serve as immediate support for Nifty,” said Hrishikesh Yedve, AVP of Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates.
Osho Krishan, Senior Analyst - Technical & Derivatives, Angel One said that as the market is headed into uncharted territory, projecting resilience seems a bit challenging.
“However, it is anticipated that the 26000 mark will pose a formidable barrier to the ongoing momentum. While any significant breach has the potential to propel the market further toward the 26200 zone, marking a sustained uptrend. On the lower end, the support base seems to upshift towards 25800-25750 on an intermediate basis, followed by 25650-25600 in the comparable period,” added Krishnan.
Dhupesh Dhameja, Technical Analyst, SAMCO Securities, said that the options market reflects a bullish outlook, with heavy put writing outpacing call writing. Significant open interest is observed at the 25,500 put (86.69 lakh contracts) and 26,000 call (70.03 lakh contracts).
“Call writers have shifted their positions higher, from 25,700-25,850 strikes to 26,000-26,200, while robust put writing signals sustained positive momentum. The put-call ratio (PCR) has surged to 1.51 from 1.48, indicating a solid bullish bias. Max pain is at 25,900, highlighting a pivotal level for future market action,” added Dhameja.
Local benchmark indices - Sensex and Nifty50 - peaked at a historic level again on Monday and settled at a record closing high as well. The Sensex closed 384.30 points higher at 84,928.61. It hit a record high of 84,980.53 during intraday trade, just 20 points shy of 85,000. Nifty50 touched an all-time high of 25,956, just 44 points shy of 26,000, before ending Monday's session with a gain of 148.10 points at 25,939.05. In the broader market, the Nifty Smallcap 100 index surged 1.12%, and the Nifty Midcap 100 index gained 0.84% at close on Monday.
The market capitalisation of the firms listed on the BSE rose to Rs 476 lakh crore on Monday from nearly Rs 472 lakh crore in the previous session, making investors richer by about Rs 4 lakh crore in a single session.
Commenting on the fundamentals, Amit Golia, Group CEO of MarketsMojo, said that the U.S. Federal Reserve's decision to cut rates by 50 basis points signals a shift in global monetary policy, and its ripple effects are felt across global markets, including India.
“Sectors benefiting from lowering interest costs might include real estate and infrastructure companies which are heavily debt-funded. Many of the Indian NBFCs in the recent past have looked outside India to fund their capital at lower interest rates, and might benefit from this regime. Other indirect beneficiaries could be discretionary sectors such as Automotives and FMCG companies,” added Golia.
He also said that Indian market valuations are already elevated, suggesting that the potential benefits of a rate cut have largely been priced in. As a result, expecting substantial returns from investments in rate-sensitive stocks may no longer be a viable strategy.