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With trump’s 90-day tariff pause, market bottom in place, Nifty eyeing 24000

ICICIdirect Research 11 Apr 2025 DISCLAIMER

Despite initial gap down opening, Nifty staged a strong rebound tracking announcement of 90 days pause on Tariff. Consequently, Nifty recouped 5% from week's low and settled the week on a flat note at 22900. Sectorally, FMCG outshone while Realty and Metal underperformed

What to expect: Amidst recent elevated global volatility, Nifty has managed to defend the key support of 21900 which has been held on multiple occasions (on a closing basis) over past one year. The current strong recovery supported by positive divergence on the weekly chart, indicates that bottom is in place. With current structural improvement we believe index has undergone a base formation while absorbing host of negative news and set the stage for next leg of up move towards 24000 in coming weeks. Hence, focus should be on accumulating quality stocks to build a medium-term portfolio onset of Q4 earning season.   

Maturity of Price and Time wise correction: Since 2002, within a structural bull market, price wise maximum intermediate corrections have typically been to the tune of 18% (barring 2004 & 2006). Meanwhile, time wise such corrections last for average 8-9 months. In current scenario, we believe index is approaching price and time wise correction as index has already corrected 17% over past seven months. Historically, buying in such scenario has been rewarding, delivering an average return of 23% over the subsequent twelve months.

Bank Nifty: While sailing through the global volatility, Banking index managed to hold March lows and now forming a higher base, highlighting relative outperformance that bodes well for next leg of up move towards 53200

Market Breadth : The market breadth has been witnessing positive divergence as Nifty 500 has formed a lower low while  % of stocks above 200 days SMA has formed a higher low as currently 15% stocks (Nifty 500 Universe) are above 200 days SMA compared to last month reading of 7%

The following development in global macros would provide cushion to domestic market:

  1. The US Dollar index is on the verge of breakdown from two years low of 99.50
  2. Brent crude oil is hovering around 63 after bouncing from 58 levels
  3. S&P 500 VIX witnessed sharp decline after recording high of 60, indicating anxiety around tariff uncertainty would settle down soon

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