RBI Rate Cut Sparks Breakout: Nifty500 Surges Past Consolidation
A surprise RBI rate cut has propelled the Nifty500 out of its consolidation zone, confirming bullish momentum in Indian equities.
In our last week’s Newsletter, we had mentioned two possible scenarios for this week - (i) What if Nifty500 gives a bullish breakout, and (ii) What if Nifty500 falls from here. If you have not read that Newsletter, you may read it here.
RBI Rate Cut Sparks Breakout: Nifty500 Surges Past Consolidation
Indian equity markets surged this week, with the Nifty500 climbing over 1.5% and breaking out of its three-week consolidation range. The rally was sparked by the RBI’s surprise 50 basis point repo rate cut and a 100 basis point CRR reduction, moves that exceeded expectations and fueled strong gains in rate-sensitive sectors like financials, real estate, housing finance and autos. This decisive policy action provided the much-needed trigger for the market to move higher, confirming the bullish momentum that had been building.
In our last week’s newsletter, we mentioned that a strong green candle would represent a decisive break above the current consolidation zone, confirming the bullish momentum. That is exactly what has played out this week. Looking ahead, the outlook remains positive. While geopolitical tensions and global market volatility could cause short-term pullbacks, investors are expected to view any corrections as buying opportunities. Current momentum is likely to attract fresh inflows and create opportunities for both short- and medium-term gains.
Market Breadth
This week, the market woke up from its slumber supported by a bullish breakout in the Nifty500 after a 3-week consolidation. A substantial majority of stocks are trading above their 10, 30 and 50 EMAs, confirming broad-based market strength, and there is still good room for further upside as these percentages have not yet reached the overbought zone. It’s important to note that overbought or oversold signals are most relevant for swing traders, as they reflect short-term momentum shifts.
Conclusion
With the Nifty500 delivering a decisive bullish breakout, the market has moved beyond its consolidation phase and entered a new leg of upward momentum. Traders can now look for opportunities to participate in this rally, as fresh breakouts often attract additional buying interest and set the stage for further gains.