Stock Market Predictions Hold True Yet Again!

From gold crossing the 70,000 mark to Nifty climbing beyond 22,000, our predictions for 2024 have been spot on. Delve into our analysis of geopolitical impacts, corporate earnings, and what the future holds.

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We nailed our prediction of Gold crossing the 70,000 mark early this year, and accurately anticipated a correction in Mid-cap and Small-cap stocks during the first quarter, as detailed in our January 08 article here. In a subsequent analysis published on April 15, we explored the potential impact of Middle East tensions on the Indian stock market predicting that these geopolitical concerns were unlikely to derail the upward momentum of Indian equities. Our analysis was rooted in historical data and market behaviour, suggesting resilience in the face of international unrest.

Read the full article here: Middle East Conflict: Do War Cries Really Worry Markets?

Stock Market Today: Nifty’s Performance

Since our last discussion, the Nifty index has impressively climbed from 22,272 on April 15 to 22,769 today, marking an increase of over 2%. Several factors have contributed to this resilience and growth:

Easing Tensions in the Middle East

The decline in geopolitical stress has undoubtedly played a crucial role. Historically, such tensions have led to increased oil prices, negatively impacting global markets. However, this time, a notable decline in oil prices coincided with these easing tensions, favouring the recovery of global equity markets, including India's.

Strong Performance in Mid-Cap and Small-Cap Sectors

The Indian market saw heightened activity in the mid-cap and small-cap sectors last week, with over 100 stocks within the broader market yielding double-digit returns. This rally was comprehensive, with all sectoral indices finishing in positive territory, despite significant sell-offs by foreign investors totalling Rs 14,703.72 crore in the cash market.

Corporate Earnings

The Indian markets have seen substantial buying, especially in banking stocks, driven by robust corporate earnings from leading banking firms and select cement firms. This surge was supported by strong US tech quarter earnings and a drop in the US 10-year yield.

Foreign Investments

Meanwhile, foreign institutional investors (FIIs) have resumed short positions, as indicated by the FII Index futures position chart showing nearly 100,000 contracts. This setup hints at potential short-covering activities that could drive a short-term market rebound or even push the indices to new highs.

Looking Ahead: What to Expect

The Nifty has maintained its ground above the 20-week average of 21,993. Despite a brief interruption in its winning streak, the Nifty resumed its upward trajectory. The fresh momentum in the banking index suggests that the Nifty could reach new heights, as long as it remains above the psychologically important 22,000 mark.

Despite the market pricing in no imminent rate cuts, recent US GDP data for the first quarter have sparked optimism that the US Fed might make at least two rate cuts this year. Future Fed policies and US non-farm payroll data will play a crucial role in shaping market dynamics moving forward.

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