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Nifty 50 Takes a Breather After Diwali Rally – What’s Next?
The Nifty 50 index, after a strong post-Diwali rally, has entered a consolidation phase, leaving traders and investors speculating about its next move. Sudeep Shah, Head of Technical and Derivatives Research at a leading brokerage, confirms this pause is a healthy correction. He reaffirms his bullish outlook, projecting 30,000 as a realistic target by next Diwali.
Why the Nifty Paused After Diwali Gains
The Nifty surged post-Diwali, fueled by:
– Positive global cues
– Easing inflation concerns
– Strong corporate earnings
The index hit record highs, crossing 20,000 and nearing 21,000, but profit-booking has since caused a mild pullback. Shah explains:
“The market was overbought after the rally. This consolidation is normal before the next upward move.”
He identifies 19,500-19,700 as a strong support zone, where fresh buying may resume.
3 Reasons Why Nifty Could Hit 30,000 by Next Diwali
Shah’s bullish case rests on:
1. Strong Macroeconomic Growth – India’s GDP remains robust, supported by government spending and rising rural demand.
2. Corporate Earnings Beat Estimates – Banking, auto, and IT sectors reported strong Q2 FY24 results.
3. FIIs Return as Buyers – Foreign investors are reinvesting in Indian equities after months of selling.
4. Global Headwinds Easing – The US Fed’s rate hike cycle may end soon, reducing market uncertainty.
“Pre-election years historically deliver 12-15% returns. 2024 could see even stronger momentum,” says Shah.
Key Levels and Trading Strategy
Traders should watch:
– Support: 19,500-19,700 (critical for retaining bullish bias)
– Resistance: 21,000 (psychological hurdle), then 22,500
– Breakout above 21,500 could trigger a rally toward 25,000.
Top Sectors to Watch for Future Gains
Shah recommends overweight positions in:
– Banking & Financials (HDFC Bank, ICICI Bank, SBI)
– Auto (Maruti, Tata Motors) – Boosted by festive demand and EV growth
– Infrastructure (L&T, Siemens) – Benefiting from government capex
– IT (TCS, Infosys) – Undervalued after recent corrections
F&O Data Signals Cautious Optimism
Derivatives trends show:
– High open interest, indicating sustained bullish sentiment
– Strong Put-Call activity at 19,500 (support) and 21,000 (resistance)
– Short-term profit-booking but no major bearish reversal
Investor Takeaway: Stay Disciplined
Shah advises:
– Avoid panic selling during corrections
– Accumulate quality stocks at lower levels
– Focus on long-term trends rather than short-term noise
Conclusion: Patience Pays Off
While the Nifty’s consolidation tests nerves, Shah’s 30,000 target by next Diwali remains credible. Strong fundamentals, FII inflows, and historical trends support further upside. Investors should stay patient, leverage dips, and align with high-growth sectors.
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