Investor optimism has been fueled by the controlled inflation in the US, leading them to believe that a modest 25-basis point interest rate increase will effectively stabilize the US economy.
The progression of the monsoon and the Kharif sowing trend in July will play a crucial role in determining future inflation. The market achieved yet another record high during the trading week ending on July 14.
This was driven by soft US inflation data, which raised hopes of a pause in interest rate hikes by the Federal Reserve, and foreign investors continued their buying spree.
The rally was further supported by an improving monsoon and a rebound in IT companies with strong earnings.
The BSE Sensex closed at 66,060.90, registering a gain of 1.19 percent or 780.45 points, while the Nifty50 ended at 19,564.50, adding 1.20 percent or 232.7 points.
Throughout the week, both benchmark indices reached new record highs of 66,159.79 and 19,595.35 respectively. The BSE Large-cap, Mid-cap, and Small-cap indices also saw gains of 1 percent, 1.3 percent, and 1.7 percent respectively.
According to Osho Krishan, Senior Analyst for Technical and Derivative Research at Angel One, “The Indian equity markets had a remarkable week, with the Nifty50 index continuing its upward trend for the third consecutive week.
The broad-based participation, coupled with the start of the earnings season, showcased the enthusiasm of the bulls to uplift the market. The Nifty50 index reached new highs, ending the week in uncharted territory and securing a weekly gain of 1.20 percent.”
Krishan further added, The supportive moves seen among global peers and sectoral rotation were evident throughout the week, reflecting in the benchmark index’s price action.
From a technical standpoint, the bulls have shown resilience, maintaining their dominance even in overbought conditions. However, it’s important to remain cautious and consider the possibility of a breather after the rapid rally.
As per his analysis, a potential short-term dip could find support in the range of 19,400-19,300, while a strong support level is located around the bullish gap of 19,200 during the corresponding period.
On the other hand, since the index has entered unexplored territory, there are no significant obstacles ahead. The next potential target range, in the near term, could be around 19,650-19,700.
