The markets have been in a consolidation mode for the past two weeks, but most experts feel that the Index could see steady gains above 25,000 this week. Fundamental factors like real GDP growth and FII buying, and the upcoming rate decision by the RBI may support the upswing.
Steady momentum may help Nifty scale above 25,500
A direct rise above 25,077 could clear the path for the intermediate objective of 25,235-25,460,” said Anand James, Chief Market Strategist at Geojit Investments.
“While an upside move aiming for 26,200 remains on the cards, we feel that such a move would require more momentum than what is present at the moment,” added James. “We feel that a dip to 24,500 could ignite such hopes.”
Ajit Mishra, Senior Vice President at Religare Broking, said that Nifty 50 is holding above the 20-day exponential moving average (20-DEMA), currently around 24,600, which is essential to maintain a positive tone. “A strong close above 25,200 could rekindle bullish momentum and open the path toward the 25,600+ zone,” said Mishra. However, if a decisive breach of the 24,600 level could trigger further profit-booking, dragging the index down toward the 24,200 mark.
GDP Data supportive
India’s real GDP expanded by 6.5% year-on-year in FY25 as per provisional estimates, slightly higher than the market consensus on jubilant private consumption and resurgent government capex. Growth was presaged on healthy Private Final Consumption Expenditure (PFCE), which surged by 7.2%, well above the 5.6% growth seen in FY24.
Growth went beyond just one engine, with a continuation in Gross Fixed Capital Formation (GFCF) growth on a high base, auguring well for the economy, especially in light of underperformance in 9MFY25 and moderation in private capex intent, said SBI Capital Markets.
FII buying helps sentiment
The change in FII strategy in India, which began in April, continued in May, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments. FIIs were continuous sellers in India in the first three months of this year. The big selling began in January (Rs 78,027 crores) when the dollar index peaked at 111 in mid-January. Thereafter, the intensity of selling declined. FIIs turned buyers in April with a buy figure of Rs 4,243 crores. In May, FIIs bought equity for Rs 18,082 crores through the exchanges.
Global macros like declining dollar, slowing US and Chinese economies and domestic macros like high GDP growth and declining inflation and interest rates are the factors driving FII inflows into India, said Vijayakumar.
However, one also needs to watch out for other global cues. The US Futures are trending lower, and that may impact sentiment in the near term.