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The Indian stock market, after experiencing a significant downturn in recent weeks, demonstrated a remarkable rebound, driven primarily by the resounding victory of the BJP-led NDA in the Maharashtra state elections. This positive political development injected a much-needed dose of optimism into the market, leading to a two-day surge in both the Sensex and Nifty 50 indices. The Sensex, on Monday, November 25th, climbed a substantial 1,356 points (1.7%), reaching an intraday high of 80,473.08. Similarly, the Nifty 50 index advanced by 444 points (1.8%), hitting a high of 24,351.55. This upward trajectory follows a similarly strong Friday, November 22nd, where a 2.5% rise was observed. The combined effect of these gains has not only reversed the negative trend of the month, but also put the Nifty 50 into positive territory for November, showing a 0.3% increase after suffering a 3.5% drop before the 22nd. While the index currently shows a healthy 12% increase year-to-date (YTD), it remains approximately 7% below its September peak of 26,277.35. October, in contrast, proved to be a particularly challenging month for investors, with the Nifty 50 experiencing a significant decline of over 6%.
The decisive BJP victory in Maharashtra played a crucial role in this market resurgence. The resulting political stability is viewed favorably by investors, who anticipate a positive impact on sectors that align with BJP's policy priorities. These sectors include infrastructure, urban development, and manufacturing, all poised to benefit from the anticipated continuity and policy direction provided by the new government. This expectation of sustained growth and policy coherence has undoubtedly contributed to the heightened investor confidence and subsequent market rally. However, it's crucial to acknowledge the cautious optimism prevailing in the market. While the political developments provide a short-term boost, there are persistent underlying concerns that cannot be ignored.
Technical analysts have been closely monitoring key support and resistance levels for the Nifty 50 index. Santosh Meena, Head of Research at Swastika Investmart, highlighted the significant support level around 23,200, corresponding to the 61.8% Fibonacci retracement of the previous rally. The successful reclaiming of the 200-day moving average (DMA) is considered a positive technical indicator. However, to maintain this upward momentum, Meena emphasizes the need for Nifty to break above its 20-DMA (approximately 24,070), with the next major resistance level set at 24,500. Similarly, Rajesh Palviya, SVP - Technical and Derivatives Research at Axis Securities, observes strong momentum above the 24,000 call concentration area. A breach of the 24,300 resistance could propel gains towards 24,450–24,500, while support is expected between 24,100–24,000. Ajit Mishra, SVP of Research at Religare Broking Ltd, points to the 100-day exponential moving average (DEMA) around 24,350 as a key level. A strong close above this level could push Nifty towards 24,550–24,750, with support between 23,850–24,000. Mandar Bhojane, Research Analyst at Choice Broking, identifies immediate resistance at 24,400–24,800, with support between 23,500–23,350. Bhojane also notes Bank Nifty's resistance at 52,000–52,200 and support at 50,600–50,200.
Despite the positive momentum, a note of caution remains. Geopolitical tensions, a strengthening US dollar index, and rising US bond yields continue to pose challenges. Santosh Meena cautions that while a temporary bottom might have been established, external factors could still impact the market's trajectory. Arun Kejriwal, Founder of Kejriwal Research and Investment Services, echoes this sentiment, highlighting the ongoing selling pressure from foreign portfolio investors (FPIs) for over 50 days as a significant concern. The reversal of this FPI selling trend is crucial for sustaining the current market rally. The recent political stability is undeniably a positive development, providing a much-needed boost to investor confidence. However, the persistent headwinds from global economic uncertainties and foreign investor behaviour underscore the need for a cautious approach. Investors are advised to carefully monitor key support and resistance levels, exercise selectivity in their sectoral investments, and stay informed about the evolving global economic landscape.
Source: Stock market outlook: Can Nifty 50 reclaim 25,000 this month amid ’Maha’ rally on D-Street?