Market participants will watch several factors this week, like retail inflation figures, manufacturing data, new listings, and interest rate decisions from global central banks. This comes after Indian equity benchmarks, the S&P BSE Sensex and Nifty50, rallied 3.4 percent each last week, extending gains for six straight weeks.
On December 8, the Sensex reached an all-time high of 69,894 as the Reserve Bank of India (RBI) held repo rates constant at 6.5 percent for the fifth straight day, by market expectations. Meanwhile, the Nifty50 soared beyond the 21,000 mark to reach a lifetime high of 21,006. The RBI raised its GDP prediction for FY24 to 7% while maintaining the exact inflation estimate of 5.4 percent.
In addition, last week, investors’ euphoria in the domestic stock markets increased as market capitalization crossed the $4 trillion threshold on December 5 following the Bharatiya Janata Party’s (BJP) decisive win in three of the four state elections. Investor confidence in a stable government formation ahead of the national elections 2024 was bolstered by the ruling party’s victories in significant state elections.
As we begin this week, analysts predict that despite occasional bumps in the market’s consolidation as investors attempt to book profits, the general tone of the markets will remain bullish.
“Currently, both the Nifty and Bank Nifty are trading in unfamiliar terrain and exhibiting significant positive momentum. With further target levels of 21,175 and 21,325, Nifty will encounter immediate resistance around 21,025. But 20,850 is a solid level of support, and 20,600 is a vital level for any decline. While some intraday consolidation or pullbacks are possible, the overall trend is still optimistic, according to Santosh Meena, Head of Research at Swastika Investment.
However, according to Vinod Nair, Head of Research at Geojit Financial Services, the conclusion of the eagerly anticipated US Federal Reserve policy meeting will significantly impact how the market feels.
“The forthcoming data-centric week will center on essential releases, such as US and Indian inflation figures. While US inflation is predicted to stay stable, inflation in India will increase. While expansion is anticipated by consensus, Indian industrial and manufacturing production is also anticipated, Nair continued.
We and India will release retail inflation data based on the consumer price index (CPI) on December 12. A Reuters poll indicates that retail inflation in India would increase to 5.7% in November, higher than the 4.87 percent rate in October.
The US Federal Reserve will announce its interest rate later this week, on December 13. According to a Reuters poll, the international central bank is predicted to keep interest rates unchanged until at least July.
On December 14, the European Central Bank and the Bank of England will also announce their interest rate decisions. A Reuters poll indicated that interest rates will likely remain steady at both central banks. Additionally, economists predict that starting in the second quarter of 2024, the ECB and BoE will begin lowering interest rates.
After reaching a record high, where is the Bank Nifty index heading?
The Bank Nifty index reached a new all-time high of 47,303.65 on December 8. With a gain of more than five percent last week, the Bank Nifty index is headed for its most significant weekly increase since July 2022.
Analysts surmise that the RBI’s steps to alleviate the liquidity imbalance, such as the reversal of the standing deposit facility (SDF), caused the surge in bank shares.
“The short-term texture for Bank Nifty is optimistic. Now, 46,500–46,200 would serve as a crucial support zone for the bulls. It might rise to 47,800–48,000 if it is maintained above the same level, according to Amol Athawale, Vice President of Technical Research at Kotak Securities.
In the meantime, senior technical analyst Rupak De of LKP Securities thinks that the Bank Nifty’s short-term breakthrough from the current consolidation of 47,000 can drive the index towards 48,000.
What formula should you use for investments?
Palka Arora Chopra, Director of Master Capital Services, feels that interest rate-sensitive industries like real estate and cars will benefit from the RBI’s in-line policy outcome since consumers now spend more while accounting for projected borrowing costs.
However, Ajit Mishra, SVP of Technical Research at Religare Broking, advises traders to remain concentrated on stock selection and to use IT and banking for lengthy transactions.