Nifty50 on track for worst annual performance in over a decade
The benchmark index has lost around 13 per cent so far this year as brokerages weigh recovery hopes against global headwinds.
The Nifty50 index has lost approximately 13 per cent so far this year, which could result in its worst annual performance in more than a decade. While the index entered oversold territory in October, brokerages suggest this may lead to a short-term technical recovery rather than ending the decline.
IIFL Capital stated that Nifty could move towards 23,300-23,500 due to its oversold position. However, the brokerage noted that a rally beyond 23,500 would require announcements to improve sentiment or bring back foreign investor flows.
Nuvama said oversold conditions could lift Nifty toward 23,250, but a sustained rally would need a decisive break above 23,480. The brokerage also noted a lack of a clear directional trend at the start of the November derivatives series on Wednesday.
Brokerages IIFL Capital and Nuvama flagged elevated crude oil prices and global investor interest in AI-linked markets as factors that could keep a rally in check. IIFL Capital said Nifty's relative outperformance would be a tough task with these factors present.
During the October derivatives series, IT stocks surged 16.3 per cent, which IIFL Capital described as the only silver lining. Nuvama expects meaningful additions to bullish positions in IT and telecom stocks during the November series, while positioning in metals, automobiles and FMCG remains defensive.