Mumbai, May 23: The Indian stock market experienced significant gains this week, driven by a decline in crude oil prices and reports of indirect talks between the United States and Iran.
The Nifty index rose by 0.32% during the week, closing at 23,719, up 0.27% on the last trading day. Meanwhile, the Sensex increased by 231 points, or 0.31%, ending at 75,415, with an overall weekly gain of 0.24%.
An analyst noted, “Despite the market’s improvement, investors remain cautious. The lack of strong buying at elevated levels has limited the market’s bullish momentum.”
The IT sector emerged as the best-performing segment this week, attracting investor interest due to appealing valuations following recent declines.
Strength was also observed in the real estate, cement, and private banking stocks, while the FMCG and consumer durables sectors showed weakness. Concerns over the impact of wholesale inflation (WPI) on company margins persisted.
The mid-cap index outperformed major indices, with the Nifty Midcap 100 gaining 1.36% and the Nifty Smallcap 100 rising by 0.41%.
The decline in crude oil prices and ongoing efforts to ease tensions in the Middle East provided support to the Indian rupee.
However, rising input costs and fears of a tight monetary policy led to an increase in domestic bond yields.
Analysts reported that the US 30-year Treasury yield reached its highest level since 2007 this week, raising concerns about persistent inflation, high energy prices, and growing global economic uncertainties.
This heightened fears that elevated interest rates may persist for an extended period, potentially affecting global liquidity and risk investments.
Market experts suggest that the Nifty 50 faces a strong resistance zone between 23,800 and 24,000, while the critical support area lies between 23,400 and 23,300.
In the Bank Nifty, immediate resistance is seen around 54,200, with a strong support zone between 53,600 and 53,500.
According to a market expert, foreign institutional investors (FIIs) continued to sell off significantly this week, with total outflows amounting to approximately ₹7,570 crores.
Investors are now focused on India’s industrial production index (IIP) data for April, which could indicate whether the recent weakness in the manufacturing sector is temporary or likely to persist.
Additionally, the Reserve Bank of India’s monetary policy meeting in June and the US core PCE data will be crucial indicators for the market. If PCE figures are higher than expected, it could dampen hopes for interest rate cuts by the US Federal Reserve, potentially limiting FII investments in emerging markets.
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