Indian Market Relief Rally Sparks Speculation for Fresh Bull Trend
The recent relief rally in the Indian market has sparked speculation among investors about the possibility of a fresh bull trend. Despite the weakness in global markets, the Indian stock market remained relatively strong during the sell-off. This has led experts to believe that if there is a trend reversal, the Indian market could witness a sharp upside movement and outperform other global bourses.
One of the triggers for this relief rally turning into a new bull trend is the expected resolution of the US government shutdown. The shutdown is set to fall on October 1st, and market participants are optimistic that the US government will take steps to avoid it. This could serve as a significant trigger for global markets, including the Indian market. In addition, the peaking US dollar and bond yield could also trigger fresh buying in equities by foreign institutional investors (FIIs).
Experts also point to the emerging strength of domestic institutional investors (DIIs) on Dalal Street, the financial hub of India. Despite heavy selling by FIIs, the Indian market has remained resilient, indicating the growing influence of DIIs. The recent surge in systematic investment plan (SIP) books to record levels further supports this view.
Additionally, the rally may be bolstered by global triggers. FIIs and DIIs are getting counterbalanced, potentially leading to a sharp upside movement in the Indian equity market. Certain sectors, such as pharmaceuticals and public sector undertaking (PSU) stocks, have already seen strong buying interest. Although there were some sell-offs in Nifty heavyweight stocks like Reliance Industries, Infosys, and HDFC Bank, quality stocks managed to navigate through the sell-off phase.
In terms of specific levels that would confirm a fresh bull trend on Dalal Street, experts suggest that a Nifty 50 close above 19,850 levels could signal a further 400-point rally. If the index sustains above 20,100 levels for more than two sessions, it could indicate the start of a new bull trend.
The top five reasons that may solidify the current relief rally include the rising SIP book in India, the counterbalancing of FIIs by DIIs, the easing of crude oil prices, and the US government shutdown deadline falling on October 1st. The peaking US dollar rates and the drop in bond yields are additional factors that could strengthen this relief rally.
Despite the recent sell-off in global markets, the Indian market has remained largely unaffected by the rise in crude oil prices. This suggests that a trend reversal in global cues could lead to a strong upside movement on Dalal Street.
It is important to note that the views and recommendations expressed by individual analysts or broking companies may vary and do not represent the views of Mint. Investors are advised to consult certified experts before making any investment decisions.
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