Nifty 50 index analysis as the Adani share price dips again

The Nifty 50 index recoiled on Friday as investors reflected on the minutes of the Reserve Bank of India (RBI). The index retreated to a low of ₹18,715, which was a few points below the year-to-date high of ₹18,888. Despite the decline, the index remains about 11% above the lowest level this year.

Indian stocks retreat

The RBI, like other global central banks, have started to take caution by pausing interest rates. In its most recent decision, the RBI decided to leave interest rates unchanged for the second straight month. It cited the fact that inflation and economic growth was slowing.

However, there are signs of division among RBI’s policymakers. Some members believe that more tightening is necessary while others believe that more hikes will lead to a slower economic recovery. In a statement, a committee member said that monetary policy was “dangerously close to levels at which it can inflict damage to the economy.” Another member said:

“Commitment to such a regime (inflation targeting) only involves aligning the nominal repo rate with expected inflation. It does not require the nominal repo to be kept higher for longer.”

Most Nifty 50 constituents were in the red on Friday. Adani Enterprises share price plunged by more than 6.58% after American regulators started to scrutinize the company. The investigation is being carried out by the Securities and Exchange Commission (SEC) and US Attorney’s Office in New York. This also explains why Adani Ports & SEZ shares also plunged by more than 4%.

Other notable underperformers in the index were Bharat Petroleum, Hindalco Industries, Tata Motors, HDFC Life, and Titan Companies. Indian bank stocks like Axis Bank, SBI, and ICICI Bank also plunged hard on Friday.

These losses were offset by gains in a number of Nifty 50 constituents. IndusInd Bank, Bharti Airtel, Asian Paints, and HDFC Bank rose by about 1%.

Nifty 50 index forecast

Nifty chart by TradingView

The daily chart shows that the Nifty index has been in a strong bullish trend in the past few months. It has faced some headwinds after hitting the important resistance point at ₹18,888, the highest point on November 30th. 

This is an important price since the index has formed a unique pattern. Some analysts believe that this pattern is a double-top, which is a bearish sign. Others see it as a cup and handle pattern, which is a continuation indicator.

Therefore, as I wrote here, the Nifty 50 index need to move above this level to confirm the bullish trend. If this happens, the next psychological level to watch will be at ₹19,000.