Investors continued to react negatively this week, as they reacted against the continuing weakness in the Indian economy. The index fell to Rs 24,130 (down 8.20% since its peak this year), as the majority of companies declined.
India’s Gross Domestic Product is declining
In the last few months, the Nifty 50 has been volatile as fears about the Indian economic situation have decreased. The Indian Statistics Agency reported that India’s economy contracted by only 5.4% during the third quarter. This was lower than the median forecast of 7.0%.
The numbers prompted analysts at major banks such as Goldman Sachs and Barclays to lower their estimates for the Indian economy.
The Indian economy is struggling due to falling wages, decreasing company profits and high inflation figures.
The Indian Consumer Price Index has been rising steadily in recent days, according to data released recently. CPI increased from 5.49% to 6.2% in October, which is higher than median estimates of 5.8%.
After hitting a low of 3.60% at the end of July, last year, India’s inflation rate has seen a significant rise. The inflation rate has reached its highest level since last August.
Analysts predict that Reserve Bank of India will begin reducing interest rates in the near future. Bloomberg analysts said in a statement that this could happen as early as next week. In this case, the bank may reduce rates from 6.5% to 6.25%. Bloomberg analyst said:
The larger-than-expected decline in India’s GDP in the quarter of July to September raises the likelihood that the rate could be cut by the Central Bank at its meeting on Dec. 6. This is not the case. “Given Governor Shaktikanta das’ comments, we still expect Reserve Bank to maintain its current position.”
Top NIFTY 50 index movers
The NIFTY50 index has been a good year for most companies. Trent is one of India’s largest retail companies and has had the best performance in this index. The company owns Westside, Zudio UTSA and Samoh.
Trent’s growth has been accelerating since the beginning of this year, and it is up 122% in this fiscal year. The company has recently posted poor financial results, despite its revenues increasing by 39% during the second quarter. This double-digit increase is good, but it’s also the lowest growth rate since March 2021.
Mahindra & Mahindra’s share price has risen by 72% in the past year, as it did very well. The company announced three weeks ago that it had increased its revenue and profit to Rs38.41billion or $455m. This was a 13.2% increase.
Bharat electronics, which saw its stock rise by 67%, was the other major gainer on the Nifty index. The company’s revenue and profit metrics have risen by more than 39% over the past quarter.
Bharti Airtel is another company that has seen a big increase in its index.
Adani Enterprises, Asian Paints and IndusInd bank were among the worst performers in the index. Adani’s stock dropped after Gautam Adani had been sued by the American Government.
Analysis of the Nifty Fifty index
TradingView Nifty50 chart
It is evident from the daily chart that the Nifty50 index has fallen in recent weeks. The index has fallen from its high earlier in the year of Rs 26,267 to Rs 24,000 The price has fallen by nearly 10% since its peak this year.
Index has fallen below 50-day and the 100-day Exponential moving averages (EMA). The MACD and Relative Strength Index indicators both pointed up in recent days.
Nifty 50 has displayed a widening rising wedge, which is a common bearish signal. There are therefore chances that the Nifty 50 index will fall to its next important point, which is Rs21300. This was the lowest level on 4th June. This would result in an index drop of about 11.4%.
If the Nifty Index rises above the resistance level of Rs 26,267, this is the alternative scenario.
As updates are made, the post Nifty index risky patterns points to a stronger reversal could be changed.
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