The start of the Santa Rally? Big advance in Nifty; 4 reasons to know! Is the Indian market starting a ‘Santa Rally’? The Nifty index continues to climb above the 16,800 mark for the new week, boosting investor confidence. The market is supported by bank and IT stocks along with Reliance.
The Nifty’s rally from the 52-week low (15,183.40) hit on June 17 can be described as eventful. Biggies like Adani Enterprises, ITC, Mahindra & Mahindra, Bharti Airtel and Eicher Motors are gaining stardom in the Nifty. Below are the reasons behind Nifty’s recent surge on this occasion.
1. Fed policy
Global markets expect the US central bank, the Federal Reserve, to reduce the pace of interest rate hikes. The details of the November Fed meeting were released last week. The Fed plans to ease current policy.
As soon as the information of the November meeting came out, the markets including India are on the path of boom. Economists expect the Federal Reserve to hike rates by 50 basis points at its December meeting.
2. Crude oil price
Crude oil prices are falling in the international market. Brent crude is priced around $80 per barrel. This is the first time since January 2022 that Brent crude prices have fallen so much.
Traders are concerned that resurgent Covid fears and lockdowns in China will reduce oil demand. Oil prices are also affected by economic recessions in Europe and the United States. Lower oil prices are good for India, which depends on oil imports.
3. A Weakening Dollar
Earlier, the Indian rupee had fallen below the 83 mark against the dollar. But the Indian rupee has managed to climb above the 82 mark as investors have started turning their attention to riskier assets. The dollar index, on the other hand, settled towards the 106 mark after touching a high of 114.78.
4. Foreign and domestic investors
The main attraction of the new rally is the return of foreign investors. So far in November, more than $4 billion in funds have flowed into the Indian market from abroad. At the same time, domestic investment firms are taking advantage of the influx of foreign investors. They are also wearing the hats of salesmen for the current month.
‘Another reason why the markets touched new highs was the increase in mutual funds (SIPs). Investors should take a long-term view to proceed with asset allocation and SIP investments. Investors should not ignore short-term fluctuations in the market,’ says Nilesh Shah, Managing Director, Kotak AMC.
The Indian stock market closed with gains on Monday as well. The Nifty added 50 points with Reliance shares up over 3 percent. 211 points have come in Sensex. Oil & Gas and Energy indices were the top performers today. Metal stocks, on the other hand, took a significant hit.
Higher bottom formations on the intraday charts indicate that the uptrend will continue. 18,400-18,350 level will provide support for Nifty. Strong resistance will also form at 18,605-18,650 levels. At the same time, if the market goes below.