Indian equity markets snapped a two-week losing streak, posting gains of over 1% as the NIFTY50 index surged past the pivotal 25,000 mark, closing the week with strong momentum. The SENSEX also climbed above 82,000, reflecting renewed investor confidence. The rally was primarily driven by a surprise move from the Reserve Bank of India (RBI), which delivered a 50-basis-point interest rate cut and a 100-basis-point reduction in the Cash Reserve Ratio (CRR). These measures injected fresh optimism, particularly in rate-sensitive sectors like Banking (+1.4%), Financial Services (+1.3%), and Realty (+9.5%).
RBI’s Bold Moves Fuel Market Rebound
The RBI’s larger-than-expected rate cut and CRR reduction were pivotal in lifting market sentiment. Additionally, the central bank revised its inflation forecasts downward, further bolstering investor confidence. This combination of monetary easing and a favorable inflation outlook created a conducive environment for equity markets, enabling a sharp recovery after weeks of consolidation.
Sectoral Performance and Broader Market Strength
Rate-sensitive sectors led the charge, with the Realty sector emerging as the standout performer, soaring 9.5%. Banking and Financial Services also posted solid gains, underscoring the market’s positive response to the RBI’s policy actions. Broader markets outperformed the benchmarks, with the NIFTY Midcap 150 and Smallcap 250 indices each advancing over 2.6%, signaling robust participation across market segments.
NIFTY50 Technical Outlook
The NIFTY50 index maintained its bullish momentum, holding above key support levels at 24,500 and 23,800. On the daily chart, the index formed a bullish candle resembling a hammer, though not a textbook pattern. Despite the weekly gain of 1%, the index remains in a consolidation phase, trading within the 24,500–25,100 range for the third consecutive week. A decisive breakout above 25,100 could signal the next leg of the rally, while a breach below 24,500 may invite selling pressure.
Market breadth showed improvement, with 72% of NIFTY50 stocks trading above their 50-day moving averages by Friday, up from 58% earlier in the week. This late surge, driven by positive domestic cues, highlights strengthening sentiment, though sustained follow-through is needed to confirm a broader uptrend.
Key Events to Watch This Week
As markets head into a new week, several factors will shape the trajectory:
US-China Trade Talks: Ongoing negotiations could influence global risk sentiment, with implications for emerging markets like India.
Inflation Data: Upcoming inflation figures, both domestic and global, will be closely monitored, especially after the RBI’s revised forecasts.
NIFTY Bank Breakout: The Bank NIFTY index is approaching a critical resistance zone. A breakout could amplify bullish momentum in the broader market.
FII/DII Activity: Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) have been active, and their flows will remain a key driver of market direction.
Conclusion
The Indian equity markets are riding a wave of optimism, fueled by the RBI’s proactive measures and strong sectoral performances. While the NIFTY50 remains in a consolidation phase, the technical setup suggests potential for a breakout if key resistance levels are breached. Investors should stay vigilant, with global trade developments, inflation data, and institutional flows likely to dictate the market’s near-term path. For now, the bulls appear to have the upper hand, but caution is warranted until a decisive trend emerges.
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