Sensex, Nifty firm up as investors shrug off global jitters on strong macros
The Indian stock market hit a new record high on September 11, 2023, with the Nifty 50 index crossing the 20,000-mark for the first time. The Sensex also rose to a record high of 67,130.59.
The gains came despite a mixed global trend, with most major markets closing lower. However, Indian equities were supported by strong domestic macroeconomic data, a breather in August, and resilient buying from domestic institutional investors.
Domestic indices experienced a gradual rally throughout the past week, buoyed by strong domestic macroeconomic data such as robust GDP and PMI figures. This painted a positive outlook for the domestic market, despite a mixed global trend marked by weak cues.
A lack of opportunity in key economies is also prompting investors to increase their bets on India. Investors are increasing exposure to stocks of companies that are likely to play a major role in boosting the economy, such as those in the infrastructure and realty sectors.
The gains were also supported by a technical breakout, with the Nifty recently breaking out of a bullish flag formation. This suggests the potential for a significant upward move in the coming weeks and months.
However, the Nifty 50 faces a critical psychological hurdle at the 20,000 mark, which currently acts as a key resistance level. If Nifty struggles to breach this level, there is the possibility of a pullback. On the downside, the range of 19,600–19,500 is seen as a robust demand zone, providing support.
Overall, the outlook for the Indian stock market remains positive in the near term. However, investors should exercise caution and avoid chasing high prices, especially in the smallcap and midcap space.
Here are some additional factors that could support the Indian stock market in the coming months:
- Continued strong economic growth
- Rising corporate earnings
- Increased foreign investment
- Lower interest rates
However, there are also some risks to the outlook, such as:
- Rising inflation
- Geopolitical tensions
- A slowdown in global growth
Investors should keep these risks in mind and rebalance their portfolios accordingly.
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