By Samir Al Khoury,

The Indian Nifty 50 index continues its upward trajectory, recording 24,461 points yesterday, its highest level ever. It has also risen by approximately 16% since its low on 24 January 2024, when it recorded 21,137 points. As of now, it is trading near 24,300 points.

These notable increases in Indian stocks are attributed to several factors, the most significant of which are:

• Large foreign investment flows into Indian markets, especially following the victory of the new government under Indian Prime Minister Narendra Modi in June 2024. This victory reflects substantial confidence in Modi from foreign investors.

• Indian economic data exceeding analysts’ expectations, such as the rise in the manufacturing and services Purchasing Managers’ Indices (PMI), recording 58.3 and 60.5 points, respectively, in June 2024. These figures are higher than previous readings.

• The Consumer Price Index (CPI) on an annual basis in India recorded 4.75% in May, which is lower than both expectations (4.90%) and the previous reading (4.83%). However, it remains above the Reserve Bank of India’s target rate of 4%.

Indian interest rates have remained fixed at 6.50% since February 2023 by the Reserve Bank of India. According to Bloomberg, easing interest rates may attract more foreign investments to the country.

Despite Indian stocks reaching record levels and high earnings multiples of about 23 times, the upward trend for Indian stocks is expected to continue, particularly with ongoing foreign investment flows into Indian markets.

Technical indicators also seem to support the Nifty 50 index in the next phase for several reasons:

1. The Relative Strength Index (RSI) is currently at 68 points, close to the overbought area, indicating upward momentum for the Nifty 50 index.

2. The MACD indicator is in blue and exceeds the signal line in orange in the positive area.

3. The moving averages for 20, 50, and 200 days are in an upward trend, with the 20-day average exceeding the 50-day average, and the 50-day average exceeding the 200-day average.

These factors suggest that the Nifty 50 index is poised to maintain its upward momentum.

Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.

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