Nifty soars, but thrill is missing

Nifty Hits New All-Time High Amid Robust GDP Growth

The Indian markets continued their upward trend, scaling fresh all-time highs last week, as anticipated earlier. The Nifty index reached a new intraday peak of 26,310 on Thursday, surpassing the previous high of 26,277 set on September 27, 2024 — some 14 months ago.

• The Nifty closed the week 0.52% higher at 26,202, marking its third consecutive weekly gain.
• India's real GDP growth data released on Friday after market hours came in at a robust 8.2% for Q2, beating both Q1's 7.8% and market expectations of 7.4%.
• The better-than-expected GDP print may lessen the chances of a rate cut in this week's Monetary Policy Committee meeting, though a modest 0.25% reduction remains possible given the benign inflation trend.

Technically, the Nifty is above all key moving averages from five to 200 days, and having closed above its 14-month high, it now sits in a relatively resistance-free zone. Wednesday's 373-point green candle proved pivotal, engulfing the prior three sessions' declines.

• The 25,842 mark, the week's low, now forms a strong support level aligned with a key trendline, while the index could target the 26,550–26,650 region on the upside.
• The Bank Nifty, which gained 1.5% for the week, appears on an even firmer footing, having already made new highs in April, May, October, and again in November.
• The Midcap Index too touched a fresh high on Thursday, reflecting a wider post-Covid rotation in favor of large caps.

However, the broader market continues to lag, with the Nifty Small Cap index slipping 0.10% for the week and 3% for the month. Nearly 38% of listed stocks are trading below their 20-day exponential moving average (DEMA), and 43% are below their 100-day DEMA.

Despite this, the current phase of large-cap outperformance is seen as a healthy and expected rotation, given the unprecedented surge seen in small caps between 2021 and 2024.

With the winter session of Parliament beginning and President Putin's visit to India later this week, markets will stay watchful, but investors are advised to stay invested.