Nifty’s Stellar Rise: What’s Driving the Market Higher? Can It Surpass 25,000? Will RBI Policy Be a Game Changer?

At the close, the Nifty 50 was at 24,708.40 up by 0.98%

The Nifty 50 has been riding a wave of bullish momentum, with a stunning recovery today, defying early losses to finish in the green for the fifth consecutive session. But what happens next? Will the momentum continue, or will caution take over?

Today’s market performance had its fair share of drama. The Nifty surged 240.95 points, closing at 24,708.40, marking a 0.98% increase. It reached an intraday high of 24,857.75, but volatility struck hard, with the index dipping to a low of 24,295.55 before closing strong. Could this be the calm before the storm?

What’s fueling this rally? It’s not just about the numbers. The market’s surge came on the back of strong sentiment fueled by expectations of a dovish monetary policy from the Reserve Bank of India (RBI). Investors are hoping for a repo rate cut or a cash reserve ratio (CRR) reduction to infuse liquidity into the economy, and foreign investors have been pouring in, buoyed by these hopes.

Nifty’s Next Big Move: Testing 24,850-25,000

After a volatile day, many analysts are pointing towards the 24,850-25,000 levels as the next target for Nifty. With strong technical signals, including a bullish candle formation and a close above the 24,575 resistance, the stage is set for an upward test. However, support levels around 24,300-24,320 suggest the path won’t be easy, and any dips might present buying opportunities.

But here’s the real question: Will the market continue its bullish rally, or is it just a matter of time before the downside catches up?

All Eyes on RBI Policy Tomorrow – What If the Rate Cut Doesn’t Come?

Here’s where the suspense builds. With a sharp market surge today, all eyes are on tomorrow’s RBI policy announcement. Will Governor Shaktikanta Das take a bold step and cut the repo rate or opt for a CRR reduction? While the majority of economists expect the rate to remain unchanged, a few are banking on a 50-basis-point CRR cut to boost liquidity. The market has priced in expectations for a rate cut, but if the RBI holds off, could we see a sharp correction?

Is Nifty’s Uptrend Sustainable?

Despite the strong rally, there’s caution in the air. Some believe that after a 4-day bullish streak, a minor correction is imminent. Still, support levels have shifted higher, with 24,550 now acting as a strong base. With IT and banking stocks leading the charge, the sectoral performance looks promising—but there’s always the risk of volatility in the face of tomorrow’s policy.

Volatile But Resilient: What’s Behind the Nifty Surge?

The Nifty’s climb was supported by strong buying in IT and banking stocks, while real estate stocks lagged. Despite the mixed global cues, the Indian market weathered the storm with remarkable resilience. A sharp intraday surge lifted sentiment, but it was the buying in the second half of the session that ultimately propelled Nifty to close above 24,700.

Investors are also eyeing the Federal Reserve’s upcoming policy meeting, which could bring further clarity on the global interest rate trajectory. If the Fed signals a rate cut, it would likely benefit Indian IT stocks, which derive a significant portion of their revenues from the US.

Oil Markets and Global Impact: OPEC+ Shakes Things Up

While the Indian markets are keeping their focus on RBI’s policy, global oil markets have their own drama unfolding. OPEC+, led by Saudi Arabia and Russia, has decided to postpone a planned increase in oil production. This move, intended to increase supply by 180,000 barrels per day starting in January, has been delayed due to ongoing challenges. With oil prices struggling to cover government spending plans, OPEC+ members are hesitant to raise production, fearing it could push prices even lower.

The group had already delayed supply hikes twice, with weaker demand in China and excess supply from the Americas weighing on prices. Brent crude has retreated by about 18% since early July, trading near $73 per barrel. This delay could have ripple effects on global markets, including India, where oil prices are a critical factor influencing inflation and overall economic growth.

The Big Question: How Will the Markets React If RBI Holds Off?

If the RBI decides to stand pat on its policy, what happens next? Will the market revert to its previous lows, or will it continue to march towards that elusive 25,000 mark? The next 24 hours will be crucial in determining whether the bulls remain in control or if a correction is on the cards.

As traders and investors brace for tomorrow’s pivotal policy decision, Nifty’s fate hangs in the balance. Stay tuned for the outcome that could make or break the next phase of this rally. Will the RBI deliver a rate cut, or will we see the markets retreat? Only time will tell.

Bank Nifty: Up by 0.63%

The Bank Nifty opened in the green, showing initial promise, but soon faced a downward swing. However, it bounced back, gaining 0.63% and closing at 53,603.55—a solid finish despite the early dips. Meanwhile, the BSE Sensex outperformed with a 1.00% gain, closing at a high of 81,765.86.

In the sectorial front, the Information Technology (IT) sector has experienced a remarkable surge, with an impressive increase of 1.95%. Within this booming sector, Infosys Ltd. stands out, gaining 2.42%, while Tata Consultancy Services Ltd. also follows closely with a rise of 2.31%.

On the flip side, the Realty sector has taken a downturn, with a notable decline of 0.25%. Within this sector, Prestige Estates Projects Ltd. has been the most affected, losing 1.95%. Similarly, Godrej Properties Ltd. also faced a setback, dropping by 1.36%.

Foreign Institutional Investors (FII/FPI) demonstrated a strong presence with a net buying value of ₹8,539.91 crore, reflecting a buy value of ₹24,716.78 crore and sale value of ₹16,176.87 crore.

Domestic Institutional Investors (DII) were on the selling side, recording a net selling value of ₹-2,303.64 crore. Their buy value stood at ₹13,395.84 crore, while the sale value was ₹15,699.48 crore.

Bank Nifty

The Nifty Banking sector had some gainers and some losers for the day.

The gainers included ICICI Bank with a 1.56% increase, Kotak Bank with a 1.05% increase, Axis Bank with a 0.78% increase, AU Bank with a 0.54% increase, and State Bank of India with a 0.53% increase.

On the other hand, the biggest losers in the sector included Punjab National Bank with a 0.83% decline, IDFC First Bank with a 0.33% decline, Canara Bank with a 0.30% decline, Federal Bank with a 0.20% decline, and Bank of Baroda with a 0.14% decline. These results suggest that most of the banking stocks performed better for the day.

Gold and Silver Rate (INR) 5th December, 2024

Stocks Highlights

Trent Ltd. saw its share price rise significantly by 3.31%, climbing from ₹6,823.80 to ₹7,050.00. This growth reflects strong investor confidence and exceptional financial performance. The company delivered a Return on Equity (ROE) of 36.55% for the fiscal year ending March 31, 2024, far exceeding its five-year average of 14.67%.

Additionally, Trent showcased operational efficiency by spending just 2.58% of its revenues on interest expenses and 8.38% on employee costs, highlighting its disciplined financial management.

In contrast, SBI Life Insurance Company Ltd. experienced a share price drop of 1.21%, falling from ₹1,452.60 to ₹1,435.00. Despite this decline, the company has shown impressive fundamentals, achieving annual revenue growth of 62.23%, well above its three-year CAGR of 17.13%.

Furthermore, SBI Life demonstrates financial stability with sufficient cash reserves to cover contingent liabilities. A bullish signal also emerged as the stock registered a five-day moving average crossover, a pattern historically associated with an average price gain of 2.25% within seven days.

Advance Decline Ratio

Today, the advance-decline ratio was 1.10 and the market breadth was positive. The volatility index India Vix increased by 0.53 to settle at 14.53 and the FIIs were net buyers today.

DAILY MARKET ACTION
Advancers – 1447
Decliners – 1316
52Wk High – 109
52Wk Low – 8
High Band Hitters – 133
Low Band Hitters – 36
200d SMA – 23703
50d SMA – 24574
20d SMA – 24041

Top Gainers and Losers Stocks

The top gainers were Trent (+3.31%), Infosys (+2.42%), TCS (+2.31%), Titan (+2.19%), and Dr. Reddy (+2.18%).

The top losers were SBI Life (-1.21%), HDFC Life (-1.09%), Bajaj Auto (-1.05%), NTPC (-0.90%), and Grasim (-0.38%).

Top Gainers and Losers Sectors

The top gainer sectors were IT (+1.95%), Oil & Gas (+0.74%), Financial Services (+0.69%), Auto (+0.65%), and FMCG (+0.58%).

The top losers sectors were Realty (-0.25%).

SECTORS – NOTABLE ACTION
IT +1.95%
OIL & GAS +0.74%
FINANCIAL SERVICES +0.69%
REALTY -0.25%

Stocks Ban List

(SEBI) F&O ban list (GRANULES close at +566.95), (MANAPPURAM close at -168.33), and (RBLBANK close at +174.22) are not currently on the stock exchange.

A stock enters the Ban List if its MWPL is above 95%. Implying that, Ban List shows the Futures and Options (FnO) stocks whose combined open interest in all FnO contracts for a given period crosses 95% of Market-Wide Position Limit.

RBLBANK stocks has the possibilities of exit from the ban list.

Daily Pivots

As per the above pivots data, 24200 to 25000 is the Nifty 50 trading range.  

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This article is only for educational purposes and is not an investment advice.