Nifty hits fresh high of 22,530: What's fueling the rally
What's the story
Indian equity benchmark Nifty 50 kicked off the financial year 2024-25 by reaching a record high of 22,529.95 in today's session. This surpassed its previous peak of 22,526.6.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted the market's bullish undertone and momentum despite signs of consolidation.
He also highlighted a recent surge in Nifty by 322 points over two trading days as an indication that the upward trend could continue.
Market trends
Broader markets experience upswing; Nifty midcap and smallcap register gains
The day saw Nifty's support at 22,200 and resistance at 22,600 after it broke its previous record early in trading.
The broader markets also witnessed an upswing with Nifty midcap 100 and Nifty smallcap 100 gaining up to 1.3% in early trade.
All sectors traded positively with media, metal and PSU bank indices registering the most gains.
This indicates a positive trend across the market spectrum.
Investor sentiment
US Federal Reserve's rate cuts expected to bolster market
Prashanth Tapse, Senior VP (Research) at Mehta Equities, suggested that investors might engage in bargain hunting.
He drew attention to the US Federal Reserve's recent announcement about considering three rate cuts this year despite inflationary pressures.
This move is expected to enhance market stability.
Tapse also mentioned that while intra-day volatility may persist in the short term, focus will gradually shift towards Q4 corporate earnings.
Global markets
Global market trends: US stocks rise, Japanese stocks dip
Globally, US stocks ended a shortened trading week mostly higher, with both S&P 500 and Dow Jones Industrial Average recording their best gains in over two consecutive quarters since 2020.
This was driven by a robust economy and expectations of potential rate cuts later in the year.
In contrast, Japanese stocks experienced a downturn with the Nikkei 225 index dropping by 1.5%.
However, Asian indices like South Korea's Kospi and Hong Kong's Hang Seng recorded gains of up to 0.9%.
Future outlook
Market analysts predict high volatility in FY25
As we enter FY25, market analysts predict high volatility due to the upcoming Monetary Policy Committee's policy meeting.
The market momentum will largely depend on Nifty's performance and the banking index.
Vinod Nair, Head of Research at Geojit Financial Services, expressed optimism about sectors such as Pharma, Capital Goods, and Infrastructure being key growth drivers.
He also anticipates a revival in sectors like FMCG and IT, driven by predictions of a normal monsoon and increased US demand following rate cut.