Indian stocks have struggled this year, with the Nifty 50 index falling to ₹23,200 from last year’s high of ₹26,300. Similarly, the BSE Sensex index has moved from a high of ₹86,020 to ₹76,745.
The smaller Nifty Next 50 index has been the worst performer as it entered a bear market after falling by 20% from its highest level in 2024.
Indian stocks have fallen at a time when the rupee has crashed to a record low and the country’s government bond yields have pulled back. The ten-year yield has dropped to 6.8% from 7.615% in January 2022. Similarly, the 30-year has dropped from 7.92% to 7.1%. So, what next for the Nifty Next 50 index?
Nifty Next 50 index analysis
The daily chart points to more Nifty Next 50 index analysis. It has crashed from last year’s high of ₹26,308 in December to ₹23,200.
The index has crashed below the lower side of the ascending trendline and the key support at ₹23,280, its lowest swing in November 21. Moving below that level was notable because it invalidated the double-bottom chart pattern.
Most notably, it has formed a death cross as the 50-day and 200-day Weighted Moving Averages (WMA) have crossed each other. This pattern often leads to more downside in the long term.
The index has formed a rising broadening wedge pattern, leading to more downside over time. This pattern is formed by two rising and diverging trendlines.
Therefore, the Nifty Next 50 index faces major technical headwinds that may push it much lower in the near term. If this happens, the next point to watch will be at ₹20,000, which is about 14% below the current level. Conversely, a move above the key resistance at ₹23,500 will point to potential gains.
Most Nifty Next 50 stocks have crashed
A closer look at the Nifty Next 50 index shows that most companies are deeply in the red this year. Only companies like ICICI Lombard, LTIMindtree, Cholamandalam, Godrej Consumer, and Adani Power have surged.
The worst-performing Nifty Next 50 index company is JSW Energy whose shares have dropped by about 15% this year. JSW is a leading player in the utility industry, operating thermal and renewable energy plants in the country. This crash happened after the company announced that it was acquiring O2 Power in $1.47 billion.
Infoedge India is a top Indian company that offers several brands like Naukri, 99acres, and AmbitionBox, has dropped by 15% this year, erasing some of the gains made last year.
The other top laggard in the Nifty Next 50 index is United Spirits whose stock is down by 14.1% this year. Union Bank of India, InterGlobe Aviation, Varun Beverages, Macrotech Developers, and Zomato stocks have crashed by over 10% this year.
There are signs that many Indian retail investors have started to take profits after the Nifty Next 50 index surged to a record high. Investors are also concerned about the plunging rupee and the slowing economy.
Recent data showed that the economy grew by just 5.4% in the third quarter of last year. Goldman Sachs analysts expect the economy to grow by 6% in the current year, while the IMF expects it to grow by 6.5% in the next few years. If this trend continues, it means that Modi’s goal of making it a developed country by 2047 will be unachievable.
Therefore, it is likely to continue falling, especially now that investors are making over 5% returns on US government bonds.
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