Nifty 50 index analysis: India stocks have more growth runway

By:
on Sep 8, 2023
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  • The Nifty 50 index has outperformed its global peers this week.
  • It is nearing its all-time high as India’s economic growth continues.
  • The index has more upside as it nears its all-time high.

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The Nifty 50 index continued recovering as investors continued buying Indian stocks. The index jumped to a high of INR 19,772 on Friday even as American indices like the Dow Jones and the Nasdaq 100 retreated for four straight days.

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Indian stocks are doing well

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The Nifty and 50 and BSE Sensex indices have done well this year as investors remain hopeful about the Indian economy. Nifty, which tracks the biggest 50 companies in India, has jumped by more than 30% from the lowest level in 2022 and is hovering near the highest level on record.

The key driver for this trend is the fact that India is emerging as one of the fastest-growing economies in the world. India has already passed the UK to become the 5th biggest economy with a GDP of over $3.38 billion. And with the German economy slowing, there is a likelihood that it will soon become the 4th.

The most recent economic data showed that India’s economy expanded by 7.8% in the second quarter of the year. In contrast, the US expanded by 2.1% while the European economy grew by just 0.3%. China expanded by 6.3% during the quarter. 

India’s economy was driven by government and consumer spending. The government is spending heavily on large infrastructure projects like roads and railway. All these investments are benefiting many companies in the country.

Therefore, there is a likelihood that the Reserve Bank of India (RBI) will not be in a mood to cut interest rates this year. Besides, the ongoing economic growth is happening at a time when inflation – except food – is easing. Therefore, the earliest that the bank will decide to cut rates will be in 2024.

Most Nifty 50 index companies have been in the green in the past one month. Coal India, NTPC, HCL Tech, Larsen & Toubro, Maruti Suzuki, and Tata Steel were the best performers. All these shares have jumped by more than 9% in the past 30 days.

Nikkei 225 index forecast

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Nifty 50

In my last article on the Nifty 50 index, I recommended that investors should consider buying the dip. This view was accurate as the index has now bounced back and moved close to its all-time high. It remains above the important support level at INR 18,895, the highest level in November. 

The Nifty 50 index is being supported by the 50-day moving average while the Relative Strength Index (RSI) has drifted upwards. It has also formed a falling wedge pattern, which is usually a bullish sign.

Therefore, the path of the least resistance for the index is bullish, with the initial target being at INR 19,984. A break above that level will see it soar to INR 20,000.

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Coal Dow Jones India INR Nasdaq 100 Index Steel Indices Stock Market