Stock market outlook: Can Nifty 50 reclaim 25,000 this month amid ’Maha’ rally on D-Street?

After a significant correction over the past month, Indian benchmark indices have shown signs of recovery. Both the Sensex and Nifty 50 extended gains on Monday, November 25, marking the second consecutive day of upward movement. The surge followed the landslide victory of the BJP-led NDA alliance in the state elections in Maharashtra, offering positive political developments that contributed to improved market sentiment.

During intra-day trading, the Sensex climbed 1,356 points or 1.7 per cent to hit a high of 80,473.08, while the Nifty 50 advanced by over 444 points, or 1.8 per cent, reaching a high of 24,351.55. This rally comes after an almost 2.5 per cent rise on Friday, November 22.

This latest surge has turned the Nifty positive for November, up 0.3 per cent, recovering from a 3.5 per cent drop until November 21. October was a particularly challenging month for investors, with the Nifty 50 shedding over 6 per cent. So far in 2024, the Nifty 50 index is still up by 12 per cent but is over 7 per cent away from its peak of 26,277.35, which it hit in September.

Political Stability Fuels Optimism

The market sentiment was significantly uplifted by the results of the Maharashtra state elections. In Maharashtra, the BJP-led Mahayuti alliance is set to form the government, which is expected to provide political stability. Investors are particularly optimistic about the impact of this stability on sectors aligned with BJP policies, such as infrastructure, urban development, and manufacturing.

Technical Analysis: Support and Resistance Levels for Nifty

As the market begins to recover, technical experts are keeping a close eye on key support and resistance levels for the Nifty.

Santosh Meena, Head of Research at Swastika Investmart, noted that Nifty found support around 23,200, which aligns with the 61.8% Fibonacci retracement of the previous rally from the election result day low to the high of 26,277. Nifty has reclaimed its 200-day moving average (DMA), signalling an encouraging technical development. To sustain the momentum, Nifty needs to cross its 20-DMA at around 24,070, with the next key resistance level at 24,500.

Rajesh Palviya, SVP - Technical and Derivatives Research at Axis Securities, observed that Nifty’s strong momentum is supported by its position above the key call concentration area at the 24,000 level. A break above the 24,300 resistance could extend the gains toward 24,450–24,500. On the downside, the 24,100–24,000 range is expected to act as strong support.

Ajit Mishra, SVP of Research at Religare Broking Ltd, suggested that Nifty is hovering around its 100-day exponential moving average (DEMA) at 24,350. A decisive close above this level could propel the Nifty toward the 24,550–24,750 zone. On the downside, the 23,850–24,000 range is likely to offer strong support.

Mandar Bhojane, Research Analyst at Choice Broking, mentioned that Nifty faces immediate resistance in the 24,400–24,800 zone. The index is currently trading above its 200-day exponential moving average (EMA), with support at the 23,500–23,350 levels. For the Bank Nifty, resistance lies at 52,000–52,200, with support between 50,600–50,200.

Caution Persists In Market

Despite the positive momentum following the election results, caution persists due to lingering challenges such as geopolitical tensions, a rising dollar index, and increasing U.S. bond yields. According to Santosh Meena, Head of Research at Swastika Investmart, while the market may have established a temporary bottom, it remains vulnerable to external factors.

Arun Kejriwal, Founder of Kejriwal Research and Investment Services, echoed this caution. He highlighted that, despite the rally, fundamental concerns remain, particularly the continued selling by foreign portfolio investors (FPIs) for over 50 days. He said it remains to be seen whether the FPIs will reverse their selling trend in the near future.

The recent political stability brought about by the BJP’s victory in Maharashtra has provided a boost to Indian market sentiment. However, caution remains due to ongoing challenges such as geopolitical tensions and foreign investor behaviour. Experts believe investors should closely monitor key support and resistance levels for the Nifty and remain selective in their sectoral approach.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.