Indian Equity Markets have been trading with a bullish bias ignoring major the negative news flows from the global peers with buying interest witnessed in each and every sectoral index. Among the various sectors, investors have been betting huge on a couple of sectors like Banking and Auto for the past few weeks where the fundamentals have started to show positive signs. Nifty Auto Index has made fresh all-time highs and is trading near the same while the banking index is also approaching its highs.
Markets have shown good resilience in comparison with the global peers in the last 4-5 weeks and are almost near the all-time highs just shy 5% away from it. On the other hand, the broader markets have also shown good momentum in line with the frontline index where the midcap index is trading hand in hand with the Nifty while the small-cap index has started showing some buying interest from lower levels.
Factors that are fuelling the current market rally:
- FIIs buying
- DIIs support from the lower levels
- Good corporate earnings
- Good Domestic macro factors
- Inflation under control
- Good Economic Indicators from the domestic front
The foreign institutional investors have been on the selling streak for the past few months and have turned into net buyers the past couple of months which has garnered investors’ confidence in to the equity markets. On the flip side, it was the domestic SIP money that was flowing into the market through mutual funds that supported the market at the lower levels and kept the undertone strong for the market participants. Good numbers from the auto industry followed by some decline in the inflation rate and the positive economic data also added to the positive sentiment on Dalal Street.
Now from the current juncture, the market participants will now be focussing on the next few major trigger which could act as the catalyst for the Indian equity markets to decide the further market trend and hit new all-time highs in the next few months. Below are some of the factors which one has to track, they may appear to be hypothetical at the current juncture but these triggers have to be fulfilled for Indian equity to test fresh highs:
- Better Corporate Earnings
- Lower Inflation Numbers
- Festive Season Demand
- Continuous FIIs Positive Inflow
- DIIs support corrections
The above are some of the fundamental factors which may lead Nifty to test the all-time high levels in the festive season. On the other hand, the technical charts are also exhibiting bullish sentiments in the price and volumes where any correction is getting bought into by the market participants. Technical indicators like the Bollinger band are showing a rising trend facing in the northward direction followed by moving averages that are trading well below the current market price of the index indicating that any dips in the market will witness fresh buying interest in the coming days.
Apart from the above factors, the global markets will hold the major key for the domestic markets. Economic data from the global peers especially from the US have to keenly watch as it has already given negative growth in the past couple of quarters raising concerns about the recession in the last quarter of the current year. The European countries are also facing the heat of the surge in inflation post-Russia and Ukraine war amid rising crude and gas prices. Any negative or positive economic data from this part of the world will also have a definite impact on the markets.
For retail or an individual investor, the equity markets are expected to remain volatile but the undertone may remain positive as major of the negative sentiments have already been factored in. Investors may start accumulating the stocks which are available at a good correction and are backed by solid fundamentals and earnings growth. On the other hand, new investors may opt for the route of SIP or mutual funds and start riding the investment journey.