The benchmark indices Nifty 50 and Sensex are expected to be in a stage of consolidation this week, as experts evaluate headline news and unconfirmed rounds of institutional buying that could signify long-term trade.
Despite the confusion and anxiety in the stock markets, the large economic indicators are showing positive signs of recovery. The GDP growth numbers are expected to rise by 0.8 percentage-points from the April-June quarter. Moreover, the Industrial Output index has been steadily increasing from the last few weeks due to renewed consumer confidence and increased production activities.
The Nifty 50 index has been under-performing its peers in the global markets, primarily due to the impact of the pandemic and its effect on domestic demand. It had dropped close to eleven percent between April and May 2021, but since then, it has looked relatively bid-supportive and some foreign investors have been suggesting that the index could be a buying opportunity.
This week, market analysts expect the Nifty 50 to rise at least two percent due to solid positive news flow and the possibility of institutional buying. The index is expected to remain range-bound between 14,000 and 14,500 points, giving investors the opportunity to explore both long and short positions across a range of stocks.
In addition, the index could benefit from the announcement of a slew of policy initiatives by the government. In the upcoming budget, the government is expected to announce a range of reforms, particularly in the field of taxation, which could boost corporate earnings and spur economic recovery.
With the eventful week ahead, the Nifty 50 index is expected to finally start to relatively outperform its peers in the global markets. It is a buy-on-dips opportunity, with institutional investors likely to enter the market and further drive the index upwards.
