Bulls Dominate: Nifty Closes Above 24K-Mark for the First Time Since Jan

Bulls took hold of Dalal Street as the Nifty 50 index extended its uptrend on Monday. The 50-stock benchmark index surge past the psychologically crucial 24000-mark for the first time since January, 6 to end at 24,125.55 points today, up 1.2% from its previous close.

The rally in the market was led by heavyweight banking stocks such as HDFC Bank and ICICI Bank, both of which posted gains following their better-than-expected Q4 numbers.

Not just these, other constituents of the Nifty Bank index also glimmered in the green, lifting the sectoral index to a record high today. Meanwhile, expectations of more rate cuts from RBI after benign inflation data along with improved net interest margin outlook as banks lowered savings rates also bolstered sentiment for the sector. Stable asset quality and attractive valuations are other key triggers behind the rally in banking stocks.

Other gainers that contributed to the Nifty’s upmove included Tech Mahindra, Trent, Power Grid Corp., Hero MotoCorp, Bajaj Finserv, Mahindra & Mahindra and JSW Steel that rose over 3-5%. Shares of JSW Steel gained after the National Green Tribunal disposed off the matter of alleged noncompliance with environmental norms at company's Dolvi Plant.

Among the laggards, Asian Paints, Hindustan Unilever, ITC, and Adani Ports and Special Economic Zone were down 1% each. Adani Ports' share price fell after the firm said last week that it will buy an Australian deep-water coal export facility for an enterprise value of about A$3.98 billion ($2.54 billion). The company's all-share deal to buy Abbot Point Port is potentially diluting its earnings per share, Nuvama Wealth Management had said.

While Eternal was also in red in early trade, it recouped losses and ended over 1% higher on Monday. Eternal's board approved a 49.5% cap on foreign shareholding. Based on the recent shareholding pattern, the current shareholding of Foreign Institutions in Eternal is at 44.88%.

On the sectoral front, only Nifty FMCG closed in red, while Nifty Oil & Gas, Nifty Realty, Nifty IT, Nifty Auto and Nifty Bank closed 1.9-2.4% higher.

Foreign investors have net infused nearly Rs 8,500 crore in the country's equity markets last week, after a phase of heavy outflows earlier in the month. This was mainly supported by renewed investor confidence, resilient domestic economy and relative insulation of Indian market from global trade disruptions.

Decline in the dollar index to around 100 level and the expectation of further weakness in the dollar, along with an expectation of subdued growth in the US and China are among the key reasons for this reversal in FII activity, VK Vijayakumar, chief investment strategist at Geojit Investments wrote in a note.

Overall, the market breadth was good as 75% of the total stocks traded on the NSE were advancing, or over three stocks were in green for every stock in red.

The BSE Sensex, on the other hand, closed 1.1% higher from its previous close at 79,408.50 points on Monday.

Although the Indian equities markets seem to have stabilised for the time being, global brokerage house Nomura has cut its Nifty target for March next year to 24,970 points on the back of Trump tariffs, downside risks to earnings and economic slowdown worries. This new target implies a mere upside of 3.5% from current levels. 

So far, the Indian markets have been resilient with risk premium in check, Nomura said. The key indices have recovered the losses following the ‘Liberation Day’ tariff announcement. “...the domestic sectors have outperformed and exporters have underperformed,” the brokerage added.

“On the weekly chart, a bullish candle has been formed, and the market is maintaining an uptrend continuation formation on both daily and weekly charts by closing above the level of 23800,” Shrikant Chouhan, head of equity research at Kotak Securities, said in a note.

Although the short-term market texture seems bullish, only range-bound activity is expected in the near future due to the overbought conditions, Chouhan said.  For traders, the 23,500 level would act would act as key support zone, while resistance zone for the bulls can be found between 24,000 and 24,200, he added. “However, if the market moves below 23,500, the sentiment could change, and the market may fall to 23,350 or 23,200, where the market has left a bullish gap,” Chouhan said.