Can Nifty, Sensex extend gains after rallying up to 2% last week? 4 factors to watch on Monday
Indian benchmark indices Sensex and Nifty ended the week higher, gaining up to 0.5%, even as broader markets declined amid rising crude oil prices above $117 a barrel. Investors will track oil price movements, foreign institutional investor (FII) activity, global cues and domestic market trends for direction. FIIs turned net buyers after a 10-week selling streak, lending support to sentiment.
As of last week, the Nifty and Sensex indices reached new heights, climbing up to 2% in gains. However, questions remain as to whether these indices can maintain their upward trajectory. Here are four critical factors investors should monitor on Monday.
Firstly, oil prices have surged over the past month, with crude oil reaching its highest level in six months. This surge can be attributed to rising concerns over the potential escalation of the Iran war following the US midterm elections. Goldman Sachs estimates that oil prices could climb to $120 a barrel should attacks on vessels in the Middle East worsen. On the other hand, prices might dip to $80 if exports resume to normal levels.
Secondly, Foreign Institutional Investor (FII) activity has played a crucial role in reversing a 10-week selling trend. FIIs turned net buyers, adding Rs 6,305 crore to equities over the last four trading days. This positive sentiment has bolstered the outlook for Indian equities, particularly due to the US Federal Reserve's decision to hold interest rates, attractive valuations in the Indian market, sustained economic growth, and a recovery in industrial capital expenditure.
Thirdly, the Indian rupee has shown a remarkable monthly gain, marking the best performance since February. The rupee strengthened against the US dollar due to RBI measures aimed at curbing dollar demand and supporting the domestic currency. However, the rupee faces resistance at 95.00 and could continue to weaken in the face of persistent foreign portfolio outflows and high oil prices.
Lastly, the broader market weakness cannot be ignored. Nifty Midcap and Smallcap indices have fallen by up to 2% on Friday. Both indices have found support from lower levels and are trading below their key moving averages, suggesting that a corrective trend is ongoing. A decisive breakout above resistance levels could potentially lead to further advances in these indices.
Written by urgent.news from The Economic Times - Top News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
