Will Nifty break out of 24,000-24,500 range this week? Top 5 factors to track

IT stocks rallied post-US election results, lifting the Nifty IT index by 4%. Conversely, the high-beta Nifty Realty Index fell by 4%.

“Consolidation continued in the market as investors stayed cautious due to disappointment in earnings and the flight of FIIs. The US Fed continued its rate-cutting cycle to stimulate the economy and is expecting a similar 25-bps rate cut in December policy meet amid moderation in inflation. While inflation in India is estimated to increase in October and the strengthening USD would reinforce RBI to hold the rate in the near-term,” said Geojit’s Vinod Nair.

With major global events and Q2 earnings behind us, the market focus now shifts to key macroeconomic data and the last round of Q2 earnings, analysts said.

Here are the key factors that will decide Nifty’s trajectory this week:

1) FII flow
FIIs have already pulled over Rs 23,000 crore from the domestic equity market this month and market insiders see no chances of a U-turn in the near term. However, consistent support from domestic investors is limiting the impact on stock prices.“Though FIIs have been very cautious about Indian markets in the last couple of months, shifting their allocation to other countries like China; India still stands on better footing as compared to other markets. The major factors attributable are political certainty, long term growth, better yields, substantial capex spending by the government and last but not the least, the central bank’s vigilant approach while announcing rate cuts to put a check on inflation,” said Manoj Purohit of BDO India.

2) Q2 Earnings
As we approach the last leg of the earnings season, stock specific action would be seen in companies like ONGC, Hindalco, Hyundai, HAL and Hero Moto which will announce their September quarter numbers this week.

The number of companies that have seen earnings downgrades in Q2 so far has been the highest since Covid days in 2020.

3) Global markets
The S&P 500 briefly surpassed the 6,000 mark and closed with its biggest weekly percentage gain in a year, as Donald Trump’s election victory and a possible Republican Party sweep in Congress fueled expectations for favorable business policies.

For the week, the S&P 500 gained 4.66%, the Nasdaq rose 5.74%, and the Dow climbed 4.61%.

4) Technical factors
Nifty remains in a consolidation range between 24,000-24,500, with mixed signals indicating that this phase may continue.

A clear breakout above the 24,500 level could drive the index toward 24,800, whereas a breakdown might increase pressure, potentially pushing it down to the 200-day exponential moving average (DEMA) near 23,500, said Ajit Mishra of Religare Broking.

5) Macro data
With major global events and Q2 earnings behind us, the market focus now shifts to key macroeconomic data and the last round of Q2 earnings. India is set to release CPI and IIP data on November 12, with WPI data expected on November 14. Globally, the U.S. inflation report on November 13 will be critical, as it may influence the Federal Reserve’s upcoming policy stance. Additionally, investors will monitor developments in China’s economic stimulus package, Santosh Meena, Head of Research, Swastika Investmart, said.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)