The Indian stock market continued its rally for the sixth consecutive session on Thursday, August 22, as the Nifty 50 closed 41 points, or 0.17%, higher at 24,811.50. The market's positive sentiment was largely driven by upbeat global cues and growing expectations that the US Federal Reserve might announce an interest rate cut in its upcoming September meeting.

Market Performance

The Sensex also mirrored the positive trend, closing 148 points, or 0.18%, higher at 81,053.19. Among the Nifty 50 constituents, ICICI Bank, Bharti Airtel, Grasim, Infosys, and HDFC Bank emerged as the top contributors to the day's gains. Conversely, stocks like TCS, Mahindra & Mahindra, NTPC, Tata Motors, and ONGC acted as the top drags on the index.

During the last six sessions, the Nifty 50 has seen a robust gain of 2.8%, reflecting the market's optimistic outlook amidst global economic developments.

Global Influences

The domestic market's upward momentum was significantly influenced by global market sentiment, particularly after the minutes from the recent US Federal Reserve meeting suggested the possibility of an interest rate cut. This speculation was further fueled by a downward revision in US jobs data over the past 12 months, increasing the likelihood that the rate cut cycle could begin in the coming weeks.

Investors are now eagerly awaiting the annual Federal Reserve's Jackson Hole conference, which begins later today. The focus will be on Fed Chair Jerome Powell's speech on Friday, which is expected to provide further insight into the Fed's monetary policy direction and the potential for a rate cut in the September meeting scheduled for September 17-18.

Broad Market Participation

The broader market also witnessed buying interest, with indices like the Nifty Midcap 150 and Nifty Smallcap 250 ending higher by 0.70% and 0.32%, respectively. On the BSE, over 340 stocks, including Ashok Leyland, HDFC AMC, HDFC Life, ICICI Lombard General Insurance, SBI Life, Persistent Systems, and TVS Motor, reached fresh 52-week highs during intraday trading.

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The overall market capitalization of firms listed on the BSE surged to nearly ₹460.5 lakh crore from ₹459.2 lakh crore in the previous session, adding over ₹1 lakh crore to investors' wealth in a single day.

Expert Analysis and Technical Outlook

Vinod Nair, Head of Research at Geojit Financial Services, highlighted that while global factors play a crucial role in shaping the Indian stock market's direction, the primary driver of the domestic market's gains has been the robust participation of retail investors. Their sustained investments, driven by an optimistic outlook for the Indian economy, have kept the market buoyant.

As of now, the number of registered investors on the BSE has reached 18.7 crore, reflecting a 33% year-on-year increase and an 8% rise quarter-on-quarter.

Nifty 50 Technical Outlook

On the technical front, Shrikant Chouhan, Head of Equity Research at Kotak Securities, suggests that the short-term market texture remains positive. However, due to temporary overbought conditions, the market may experience range-bound activity in the near future. For traders, the ideal strategy would be to buy on dips and sell on rallies, with 24,750-24,700 acting as key support zones and 24,900-24,950 serving as potential resistance areas. Below 24,700, market sentiment could shift, prompting traders to consider exiting long positions.

Rupak De, Senior Technical Analyst at LKP Securities, echoed a similar sentiment, noting that as long as the Nifty remains above 24,650, the sentiment may continue to favor the bulls. The current rise could potentially extend towards the 25,000 mark in the near term.

Conclusion

As the Indian stock market continues to ride the wave of positive global cues, the upcoming Jackson Hole conference and the US FOMC meeting will be closely watched by investors for further indications on the Fed's monetary policy. In the meantime, the sustained participation of retail investors and the market's technical indicators suggest that the Nifty 50 could continue its upward trajectory, with potential gains on the horizon.

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