Nifty 50 Index Hits Another Record High. What Could Stop It?

Summary:
• India's benchmark Nifty 50 Index hit another record high on Wednesday, but occurences elsewhere could slow the rally.

The Nifty 50 Index rose to new all-time highs on Tuesday, rising to an intraday high of 24,461 points before going down by 0.8 percent at the time of writing. The Index has been on a strong upward momentum since the first week of June, gaining 6.5 percent in June and up by 1 percent so far in July.

Investors are upbeat about the Indian economy, and this is reflected in the performance of the country’s stock markets. In the latest development, Moody’s maintained its forecast for the Indian economy in to grow by 6.8 percent in 2024.

Foreign Institutional Investors (FII) have been central to the upturn in the Indian markets after the election period, and the US interest rate decisions will have a bearing on the trajectory of the markets. Fed chairman Jerome Powell started his Congressional testimony on Tuesday, with a cautionary tone on the interest rate policy. He will continue his testimony on Wednesday, and traders will have their ears on his speech for cues on a potential rate cut in September.

Hints on potential rate cuts have provided fuel for the recent market rally, and a continuation of the dovish tone by Powell will boost investors’ appetite for stocks.  The US headline inflation figures will be out on Thursday, and will provide clearer guidance on potential Fed interest rate changes. However, that could see many investors tame their appetite for stocks in the intervening period, and potentially result in a decline in the Nifty 50 Index performance.

Technical analysis

The momentum on the Nifty 50 Index signals that the buyers are currently in control. The upside will likely prevail if the action stays above the 24,287 pivot. The buyers could encounter the first resistance at the 24,311 mark. However, if they hold on to control at that point, they could breach the mark and potentially build the momentum to test 24,338. Alternatively, the downside will likely continue if resistance stays at the 24,287 mark. In that case, the first support will likely come at 24,264, but extended control by the sellers could push the action further down to establish the second support at 24,237.