The Indian stock market has experienced a significant consolidation recently, with the Nifty 50 and Bank Nifty are currently trading sideways. As global and domestic market conditions continue to evolve, investors and traders are left wondering whether the Nifty moves beyond 25,000 or falls below 22,000.
In today’s trading session, both the Nifty 50 and Bank Nifty opened with a slight gap-up, indicating volatility at the start. However, as the session progressed, both indices faced volatility, leading to a rise in their intraday gains a bit, and as of now, Bank Nifty and Nifty, trading flat (sideways) at the moment.
Index Overview
The Nifty Index opened at Rs. 24,571.60, with a gap-up of up to 0.17 percent from its previous close of Rs. 24,538.40. The index reached a high of Rs. 24,644.25 but is currently trading slightly above its opening price.
Experts’ Outlook on Nifty
According to experts, the significant rally in the market is expected to continue as long as the Nifty 50 stays above the 25,000 mark, with a decline anticipated only if it falls below 22,000. Until then, the market is likely to remain range-bound within these levels, reflecting a period of consolidation and sideways movement
Manish Sonthalia, Chief Investment Officer at Emkay Global Financial Services stated that the Nifty50 index is likely to remain within a range of 22,000 to 25,000 for the foreseeable future. Market experts believe that strong support at 22,000 and resistance at 25,000 will keep the index from making any significant moves beyond these levels.
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Here are the reasons for the statement that Nifty50 is unlikely to move above 25,000 or fall below 22,000
Earnings and Valuation Anchors: Nifty’s projected earnings per share for FY26 and FY27 average around 1,230–1,240. When applying the long-term average P/E multiple of 18, the fair value for the index comes close to 22,000, making it difficult for the market to sustain levels much higher than this in the near term.
Global Headwinds: Elevated U.S. bond yields and continued outflows from foreign institutional investors are creating a turbulent environment for Indian equities. These global factors are limiting the potential for significant upward movement in the market.
Absence of Immediate Domestic Catalysts: There are no major domestic policy changes or economic reforms expected soon that could act as a trigger for a sharp rally. Most of the anticipated earnings growth is already reflected in current prices, keeping the market in a consolidation phase.
Shift in Growth Drivers: India’s economic growth is gradually shifting from being investment-driven to consumption-led. However, this transition will take time, and with the government focusing on fiscal discipline, large-scale spending is unlikely to provide a near-term boost.
Sectoral Opportunities and Risks: While sectors like consumption, BFSI, pharma, and metals are seen as attractive, overall market valuations remain high. In the defense sector, stock prices have surged on momentum, but Sonthalia cautions that fundamentals need to catch up for these valuations to be justified.
Currency and Global Flows: A weakening U.S. dollar and narrowing bond yield spreads between the U.S. and India could attract more foreign investment into Indian markets. A strengthening rupee also makes Indian assets more appealing to global investors.
Potential for Future Upside: Stronger earnings growth could materialize in the second half of FY26, helped by a low base, better macroeconomic conditions, and possible income tax breaks. The 8th Pay Commission could also increase government employee spending, supporting consumption.
Conclusion
Overall, the Nifty50 is expected to remain range-bound between 22,000 and 25,000 in the near term, with potential for a breakout only if there is a significant improvement in earnings or supportive policy measures in the future.
Written by Sridhar J
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