Dalal Street Update: Nifty 50 Hits New Highs Amidst Strong Uptrend—Stay Selective and Cautious

The Indian stock market had a strong week, with the Nifty 50 Index ending on a high note. The Nifty gained 412.75 points, up by 1.66% for the week, and set new records for both its lifetime high and closing high. It traded within a range of 393.65 points during the week. Volatility decreased slightly, with the India Vix dropping by 1.18% to 13.39.

Monthly Overview

For the month, the Nifty gained 284.75 points, or 1.14%. Although the market is on a strong uptrend, it has moved significantly above its average levels, which could lead to some profit-taking and volatility at higher levels.

Current Market Indicators

The Nifty’s nearest 20-week moving average is 23,659, which is 1,576 points below the current level. The 50-week moving average is at 22,104, which is 3,131 points below the current level. These deviations from the average suggest that the market might experience some fluctuations.

Expected Market Trends

On Monday, the market is expected to start stable. Resistance points are seen at 25,400 and 25,495, while support is at 23,900 and 23,710. The Relative Strength Index (RSI) is at 75.03, indicating a mildly overbought condition, while the Moving Average Convergence Divergence (MACD) remains bullish.

Short-Term Outlook

The market has recently surpassed its previous high of 25,078 and is expected to trend higher, raising support levels. Short-term support has shifted to 25,000, and a drop below this could lead to consolidation. Market breadth remains a concern, as the broad market move is not as strong as expected.

Investment Strategy

While the uptrend is strong, it’s crucial to protect profits and be cautious. Stocks in the Pharma, IT, FMCG, and Public Sector Enterprises (PSE) sectors are likely to perform well. A selective and cautious approach is recommended for the upcoming week.

Sector Performance

Relative Rotation Graphs (RRG) show a defensive setup, with the Pharma, IT, and FMCG sectors in a leading position. The Nifty Consumption Index is moving back towards the leading quadrant, while the Auto, PSE, and Realty indices are weakening. The Financial Services index is lagging, but Energy, Commodities, and Infrastructure sectors show some improvement.

Overall, keep a close watch on market trends and protect your gains as the market remains in a strong uptrend.