5 factors that can propel Nifty 50 to fresh peaks in December
State election outcomes, interest rate trajectory in the US, and geopolitical issues are key factors that will affect the market in December, according to experts.
Nifty 50 is inching closer to its record high level of 20,222.45 which it hit in intraday trade on September 15 this year. Nifty 50 touched the level of 20,136.15 in morning trade on Thursday, November 30. However, it erased all gains later and traded about 30 points lower around 11:20 am.
Experts are positive about the market as they point out the prospects of the country's healthy economic growth. Moreover, foreign portfolio investors (FPIs) have resumed buying Indian equities after two months. Data from NSDL shows FPIs have bought in Indian equities worth ₹4,687 crore in November so far.
State election outcomes, interest rate trajectory in the US, and geopolitical issues are some of the key factors that will move the market in December.
"Favourable outcome of state elections, reinforcement of the belief that the top of rate hike cycle is behind us globally and any favourable development in the two geopolitical conflicts are some factors that can take the Nifty higher in December," said Deepak Jasani, Head Retail Research, HDFC Securities.
Sandeep Raina, Executive Vice President-Research at Nuvama Professional Clients Group expects factors like strong corporate earnings, lower inflation, improved GDP numbers, strong private and government capex and positive global cues would take the market to new highs while the favourable election results would be the immediate trigger to the market.
On the technical front, the Nifty is in strong bullish momentum; however, according to Pravesh Gour, Senior Technical Analyst at Swastika Investmart, 20,110–20,220 is an important resistance area for the Nifty 50.
"Above this, we can expect an all-time high in the Nifty at 20,500. Notably, the immediate and robust support level stands at 19,800, providing a solid foundation, with 19,600 acting as a pivotal base for any potential pullback," said Gour.
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Here are five factors that can propel Nifty 50 to fresh peaks in December
1. State election outcomes
Experts believe the outcomes of state elections can influence the mood of the market. These state elections hold significance as they are expected to have some impact on the crucial Lok Sabha or general election in 2024.
“There are five states (Mizoram, Madhya Pradesh, Chhattisgarh, Rajasthan, and Telangana) where elections were conducted. A stable political environment could boost investor confidence and drive the market higher,” said Gour.
As of now, the Congress is in power in Rajasthan and Chhattisgarh, while the BJP rules Madhya Pradesh. Zoramthanga of the MNF is the Mizoram Chief Minister and BRS' K Chandrashekar Rao is in power in Telangana.
The assembly elections 2023 exit poll results are set to be declared after 6:30 pm on Thursday, November 30.
2. Fed's signal on rate cuts
Even though the market appears to have discounted the possibility of interest rates going down from May to June next year, a clear signal on this from the US Fed will give a boost to market sentiment.
According to Bloomberg, billionaire investor Bill Ackman believes the US Fed will begin cutting interest rates sooner than markets are predicting. The Fed started raising rates in March 2022, at the fastest pace of rate increases in 40 years.
The US Federal Open Market Committee (FOMC) will meet on December 12-13 to decide on monetary policy.
Also Read: Fed interest cut in Q1? Bill Ackman feels rate cut coming 'sooner than market prediction’
3. Valuation comfort in large-caps
The sharp gains in the mid and small-cap spaces have shot up their valuation while large-caps still have some valuation comfort. Market experts expect money to move from mid and small-cap- segments to the large-cap segment. This can push Nifty 50 to record highs in December.
4. Positive developments on the geopolitical front
Geopolitical tensions have kept investors nervous since last year. The Russia-Ukraine war continues while the Israel-Hamas war is under a truce.
According to an AFP report, a truce between Israel and Hamas will continue, both sides said Thursday, moments before the deal was due to expire, though details of any official agreement remained unclear.
Positive developments on the geopolitical front will influence the mood of the market and have the potential to make the benchmarks hit their fresh record highs.
5. Better-than-expected macro numbers
The Indian economy remains one of the fastest-growing large economies in the world. India's macro numbers are expected to show a healthy rise but if they come better than expected, it may trigger strong buying interest in the market not from the domestic investors but from FPIs too.
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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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