Nifty 50 index has shed around 5% in the last 1 month on the back of soaring US bond yields and the US dollar (USD), rising crude oil prices, rupee depreciation, and escalating US-Iran tensions. Moreover, FII outflows also added to the weak sentiment.
The benchmark index has touched a record high of 26,373 in January, meaning a move to 25,000 would represent a recovery rather than a fresh record. However, the index has shed over 12% or over 3200 points from this peak to currently trade around 23,100 levels.
However, the index has since faced pressure from rising US bond yields, elevated crude oil prices and continued selling by foreign institutional investors (FIIs).
“Against a geopolitically charged backdrop, investors closely tracked proceedings at the UN General Assembly for signals on the US–Iran conflict and the prospects for renewed diplomatic engagement, while also monitoring developments in U.S.–China discussions. Although crude oil prices ended the week lower, heightened volatility kept inflation concerns elevated, weighing on overall market sentiment,” stated Vinod Nair, Head of Research, Geojit Investments Limited.
With the Nifty currently trading around 23,100 mark, market experts said a sustained recovery would require key external headwinds to ease. Upcoming quarterly earnings, particularly from heavyweight sectors such as banking and IT, could also determine whether the index is able to regain momentum and move towards 25,000.
Mayank Jain, Market Analyst at Share.Market by PhonePe, pointed to global geopolitical tensions and elevated crude oil prices as continuing sources of pressure on Indian equities. He noted that higher crude prices were particularly important for India because of its dependence on imported oil.
“Elevated crude prices remain a key concern for an import-dependent economy like India, adding short-term pressure on inflation, domestic currency levels, and overall market sentiment,” Jain said.
For the Nifty 50, he said heavyweight sectors including IT, oil and gas, FMCG and banking would have an important role in any market-wide recovery. A combination of stronger corporate performance and easing global macroeconomic conditions could help the benchmark regain its upward trajectory.
Nifty 25,000 target: What could trigger the next leg higher?
The Nifty 50 could reclaim the 25,000 mark this year, but the road back to the level is likely to depend on a combination of global macroeconomic conditions, foreign investor flows and corporate earnings, rather than domestic momentum alone.
Vinit Bolinjkar said the 25,000 level remained achievable this year, particularly because the Nifty had already crossed that mark earlier in the year. According to him, the index’s decline towards 23,000 reflected several external pressures, including the US 10-year Treasury yield moving above 5.1%, crude oil prices rising beyond $100 a barrel and continued FII selling.
“25,000 on the Nifty is achievable this year, and it’s worth remembering the index already touched a record high of 26,373 back in January – so this is about reclaiming ground, not breaking new territory,” Bolinjkar said.
He said the recovery would require a combination of factors to fall into place. A moderation in crude oil prices and US bond yields, a reversal in FII flows and stronger-than-expected corporate earnings could collectively help the benchmark close the gap.
Bolinjkar also highlighted banking and IT earnings as particularly important for the index. In his view, the ability of these sectors to deliver earnings strong enough to support current valuations would be an important factor in determining whether the Nifty can sustain an upward move.
Echoing a similar sentiment, Vishnu Kant Upadhyay, AVP, Research Advisory at Master Capital Services, said the Nifty’s ability to reclaim 25,000 would depend on earnings as well as the broader macroeconomic environment. The index was hovering around 23,000 and was down more than 11% year-to-date, reflecting pressure from elevated US bond yields, uncertainty around crude prices and foreign fund outflows.
“The upcoming quarterly earnings will be crucial in determining whether the market can build a sustainable recovery. A cooling in bond yields, stability in crude prices and a revival in FII buying could provide further support,” Upadhyay said.
Technical Outlook
From a technical perspective, Upadhyay of Master Capital identified the 100-day exponential moving average (EMA) near 24,000 as an important hurdle for the benchmark. He said a decisive breakout and sustained move above this level could improve market sentiment and potentially open the path towards 25,000, provided the wider macroeconomic environment also turns supportive.
The technical hurdle therefore puts the 24,000 level in focus before the Nifty can make a sustained attempt at 25,000. A recovery in global cues, combined with improving domestic earnings, could be important for the index to move beyond this resistance zone.
Overall, the experts pointed to a similar set of triggers for a move towards 25,000: lower US bond yields, greater stability in crude oil prices, renewed FII buying and stronger corporate earnings. The Nifty’s previous record above 26,000 means 25,000 is within a previously established trading range, but the index would first need to overcome technical and macroeconomic hurdles around current levels.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
