The NSE Nifty 50 index crossed the long-term 200-Daily Moving Average (200-DMA) in intra-day deals on Monday, for the first-time in nearly four months – since the breakdown on January 6, 2025. The Nifty hit a high of 24,188 levels in intra-day deals on Monday, rising 1.4 per cent, or 332 points.
The Nifty 50 has surged over 11 per cent, or 2,400 points, in the last eight trading sessions. Amid this rally, the Nifty not only conquered its short-and-medium term moving averages, i.e. the 20- and 100-DMA at 23,170 and 23,400 respectively, but also surpassed its long-term (200-DMA) average on April 21, which now stands at 24,051.
In general, the 200-DMA acts as one of the key indicators in determining a positive and negative trend. Stocks or indices trading above the long-term moving average are considered as positive, and vice versa.
The recent rally in the markets, analysts believe, could also be driven by a possibility of a trade deal between India and the US, and India is currently better prepared to gain from supply chain relocation. Those at Nomura, for instance, believe that the worst of tariffs and trade war is over, except for the announcement on sector-specific tariffs such as pharmaceuticals.
The news flow on progress on bilateral trade agreements and even an attempt for US-China trade negotiation, they suggest, can be incremental positives.
“We expect the Nifty to trade in the range of 17-20x one-year forward earnings, and reset March 2026 Nifty target at 24,970 based on 19.5x FY27F Nifty EPS of Rs 1,280. In case of a stable risk environment, we expect FII flows to be supportive after the intense sell-off in the past six months. Assuming a valuation range of 17-20x, we expect market return of -9% to +7% over the next one year,” wrote Saion Mukherjee, managing director and head of equity research for India at Nomura in a recent co-authored note with Amlan Jyoti Das.
Out of the 50 Nifty constituents, 21 are trading above the respective 200-DMAs, including HDFC Bank, ICICI Bank, Bharti Airtel, Bajaj Finance, Bajaj Finserv, State Bank of India (SBI), Eicher Motors, Nestle India and Power Grid Corporation.
The rally in financial stocks has mostly been led by HDFC Bank and ICICI Bank that announced their respective March 2025 (Q4-FY25) results last week. The Nifty Bank index, a gauge of the performance of bank stocks on the NSE, move up 2 per cent in intraday deals and surpassed its previous high of 54,467.35 levels hit on September 26, 2024, data shows.
Meanwhile, from a technical perspective, Shrikant Chouhan, Head Equity Research, Kotak Securities suggests that the Nifty has formed a bullish candle on the weekly chart, and the market is maintaining an uptrend continuation formation. The investing strategy, he said, should be to buy between 23,650 and 23,550 levels, with a stop loss at 23,500 on a closing basis.
“The overall market texture is bullish. For traders, the levels of 23,500 (Nifty) / 77,400 (Sensex) would act as key support zones, while resistance zones are between 24,000/79,000 and 24,200/79,600. However, if the market moves below 23,500/77,400, the sentiment could change and the indices may fall to 23,350/76,900 or 23,200/76,500, where the market has left a bullish gap,” Chouhan suggests.
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