The market was in a downtrend for the last 6 months largely because of continuous selling by Foreign Institutional Investors (FIIs). Key reasons for FII selling were the strengthening of the US dollar, concerns over a slowdown in corporate earnings growth, global economic uncertainties, high valuations of emerging markets, and trump tariff risks.
Factors that helped the Market rebound
The government is constantly working to regain India’s growth momentum. With tax cut announcements, that can help boost the GDP and help with overall economic growth. RBI also cut the Cash Reserve Ratio (CRR) & Repo rate, with further rate cut expectations to boost consumer spending. Additionally, Brent Crude prices are trading in a broad range with reduced volatility, which is highly beneficial for India as the import cost is kept in check, which in turn reduces the trade deficit.
Nifty 50 Falling Trendline Breakout
A falling trendline or downtrend line is a straight line drawn across declining highs on the price chart. The line represents as a resistance level, which indicates that sellers are in control of the downtrend. When a trendline is broken, it signals a potential trend reversal or just a temporary breakout.
On a weekly time frame, the Nifty 50 has given a closing basis break out of a falling trendline. Since September the falling trendline was never broken on a closing basis.
THE MAJORITY OF NIFTY 50 STOCKS ARE STILL IN THE DEATH CROSS
The Death Cross is a bearish technical pattern that occurs when the 50-day moving average (DMA) crosses below the 200-day moving average (DMA). This crossover indicates a potential shift from an uptrend to a downtrend, signaling weakness in the stock or broader market. It is the opposite of the Golden Cross.
Out of the 50 Constituents of Nifty 50, 33 stocks, or 66 percent of the total constituents are still trading in the Death Cross, this shows that the medium-term trend is still bearish.