The Indian stock markets, represented by the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE), are expected to maintain a generally positive trajectory in the week starting September 23, 2024. Both benchmark indices, Nifty 50 and Sensex, are projected to continue their upward momentum, driven by a mix of domestic factors, global cues, and technical indicators.
Key Drivers for the Week:
- Positive Global Cues: Optimism in global markets, particularly due to expectations of potential rate cuts by central banks like the US Federal Reserve and the European Central Bank (ECB), is likely to provide a supportive backdrop. A stable global sentiment will continue to bolster Indian equity markets as seen in the previous weeks.
- Technical Indicators: The Nifty 50 index is expected to trade in the range of 25,217–25,955 during the week, with a generally bullish outlook. Technical analysis suggests strong support around 25,100, while resistance levels are anticipated at 25,500 For the Sensex, after reaching record highs of 83,116.19 recently, the index is likely to maintain its strength due to strong corporate earnings and sustained foreign institutional investor (FII) inflows.
- Sectoral Performances:
- Banking and Financials: The Bank Nifty index is likely to remain positive, with expected levels between 53,222 and 55,256. This is supported by strong performance in banking stocks, aided by improved credit growth and balance sheets/
- IT and Auto Sectors: Companies like Infosys, Wipro, and Tata Motors have been top performers in recent sessions, and their stocks are anticipated to drive further gains this week. The auto sector is especially buoyant due to the upcoming festival season, which traditionally boosts sales(
- Macro Factors: Domestic economic indicators, particularly the inflation rate and industrial production data, will play a significant role. With inflation showing signs of stabilizing, investors expect this to reflect positively on market sentiment. Additionally, corporate earnings in Q2 are forecast to show improvements on a quarterly basis, adding further momentum.
Risks and Uncertainties:
- Crude Oil Prices: Rising global crude oil prices could impact market sentiment, especially if it leads to inflationary pressures. Additionally, fluctuations in the USD-INR exchange rate may contribute to volatility.
- RBI Intervention: Any potential intervention by the Reserve Bank of India (RBI) to stabilize the rupee could either support or dampen investor sentiment, depending on the extent of the action taken.
Overall, investors can expect the markets to remain buoyant, with a continued rally in key indices, supported by positive sentiment, strong earnings, and favorable global trends. However, traders should remain cautious about external risks like commodity price fluctuations and geopolitical developments that could introduce short-term volatility.
