India’s benchmark indices at record highs, stock markets in overbought condition


India’s benchmark indices reached new record highs on Monday, with Nifty surpassing 20,650 and Bank Nifty achieving a record high, gaining 1617.20 points, said Mandar Bhojane, Research Analyst at Choice Broking. The Nifty closed the day with a substantial gain of 418.9 points or 2.07 per cent, settling at 20,686.80. At close, the Sensex experienced a significant surge, rising by 1,383.93 points or 2.05 per cent to reach 68,865.12.

This positive market momentum reflected an overall sense of optimism and confidence in the financial markets. Bulls demonstrated strong dominance in Monday’s trade, propelling the index higher right from the beginning. Except for media and pharma sectors, all others concluded the day with gains, with banking and energy stocks emerging as the top performers.

However, mid and smallcap indices underperformed as buying was concentrated to index-based stocks, Bhojane said.

On the daily chart, the Nifty sustained its upward momentum after a gap-up opening of 300 points, forming a robust bullish candle indicative of a strong uptrend.

However, a closer examination of lower time frames, particularly the hourly charts, revealed an overbought condition. A correction, either in terms of time or price, seems warranted, suggesting that one should consider entering positions on dips for a more favorable risk-reward profile, Bhojane added.

Bank Nifty index witnessed a massive run up of 1,600 points during the day and managed to hit a new lifetime high of 46,484 on Monday, surpassing its previous high of 46,369 recorded in July 2023, said Ajay Menon, MD & CEO, Broking & Distribution, MOFSL.

The banking index was underperforming for the past couple of weeks, and Monday’s recovery has added more momentum to the broader market, he said.

Banking stocks witnessed fresh buying following BJP’s strong show in state elections, which has bolstered expectation for political continuity in 2024.

This augurs well for macro and policy momentum for India, which, at the moment, is seeing the highest growth among major economies – both in terms of GDP as well as corporate earnings. This in turn could boost financial and banking activities.

The rate-sensitive Bank Nifty index managed to hold support near 50 WMA (weekly moving average) and moving in a rising channel. As per the recent setup, now it has to hold above 44,444 levels to extend the move towards 47,000 and 47,500 zones.

Axis Bank, ICICI Bank and HDFC Bank could take the lead to accelerate the further move in the index, Menon said.

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