Nifty 50 is inching closer to its record high of 20,222.45, which it hit in intraday trade on September 15 this year. Nifty 50 touched the level of 20,136.15 in morning trade on Thursday, November 30. However, it erased all the gains later and was trading about 30 points lower around 11:20 am.
Experts are positive about the market, because they point to the prospects of healthy economic growth of the country. Moreover, foreign portfolio investors (FPIs) resumed buying Indian stocks after two months. NSDL data shows that FPIs bought in Indian equities ₹4,687 crore in November so far.
State election results, US interest rate trajectory and geopolitical issues are some of the key factors that will move the market in December.
“A favorable outcome of state elections, strengthening of the belief that the top of the rate hike cycle is behind us globally and any favorable development in the two geopolitical conflicts are some factors that may push the Nifty higher in December,” said Deepak Jasani, Head Retail. Research, HDFC papers.
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Here are five factors that can drive Nifty 50 to fresh highs in December
1. State election results
Experts believe that the results of state elections can affect the mood of the market. These state elections have significance as they are expected to have some impact on the crucial Lok Sabha or general election in 2024.
Currently, the Congress rules in Rajasthan and Chhattisgarh, while the BJP rules Madhya Pradesh. Zoramthanga of the MNF is the Mizoram Chief Minister and K Chandrashekar Rao of BRS is in power in Telangana.
The 2023 assembly poll results are declared after 6:30 pm on Thursday November 30.
Also Read: Assembly Elections 2023 Exit Poll Live Updates: Who Will Win Rajasthan, Telangana? Survey forecasts will be released soon
2. The Fed’s signal about rate cuts
Although the market seems to have discounted the possibility that interest rates will be lowered from May to June next year, a clear signal of this from the US Fed will give a boost to market sentiment.
According to Bloomberg, billionaire investor Bill Ackman believes the US Fed will start cutting interest rates sooner than markets predict. The Fed began raising rates in March 2022, at the fastest rate hike in 40 years.
The US Federal Open Market Committee (FOMC) will meet on December 12-13 to decide on monetary policy.
Also read: Fed rate cut in Q1? Bill Ackman thinks rate cut will come ‘sooner than market forecast’
3. Assess comfort in large hats
The sharp gains in the mid and small cap spaces have boosted their valuation while large caps still have some valuation comfort. Market experts expect money to move from mid and small cap segments to the large cap segment. This may push Nifty 50 to record highs in December.
4. Positive developments on the geopolitical front
Geopolitical tensions have kept investors nervous since last year. The Russia-Ukraine war continues while the Israel-Hamas war is on pause.
According to an AFP report, a truce between Israel and Hamas will continue, both sides said on Thursday, moments before the agreement expired, although details of any official agreement remained unclear.
Positive developments on the geopolitical front will influence the mood of the market and have the potential to make the benchmarks hit their fresh record highs.
5. Better than expected macro numbers
The Indian economy remains one of the fastest growing large economies in the world. India’s macro numbers are expected to show healthy growth, but if they come in better than expected, it may trigger strong buying interest in the market not only from the domestic investors but also from FPIs.
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Disclaimer: The views and recommendations above are those of individual analysts, experts and second-hand companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Updated: 30 Nov 2023, 12:03 pm IST