Indian stock market: 5 key triggers that could drive Nifty 50 to 26,000 in the short term

Mint

5 hours ago

The Nifty 50, the benchmark of the Indian stock market, is hovering near 25,600, eyeing a reclaim of the 26,000 mark. The index is now about 3 per cent down from its all-time high of 26,277.35, which it scaled on September 27 last year.
Amid global turmoil, tariff-related concerns and weak earnings, the domestic market has performed well in the first half of the calendar year 2025 (H1CY25). On a monthly scale, the Nifty 50 has been in the green since March this year.
"Nifty has managed to absorb most of the negative news in the last two months, from wars and geopolitics to the tariffs. While that was happening, global liquidity was rising. Whether you consider US M2 (measure of the money supply) going higher or the rate cuts in Europe and India. This has kept markets elevated and hopeful that the earnings slowdown will revive into the year-end," Rohit Srivastava, the founder and market strategist at Indiacharts.com, observed.
The index is expected to scale fresh record highs in the second half of the year, as the medium-term outlook for the market remains positive, supported by the country's healthy macroeconomic fundamentals and expectations that tariff-related uncertainties will recede.
Let's take a look at five key factors that could drive the Nifty 50 to 26,000 or even to uncharted territories in the short term:
Investors are focusing on the India-US trade negotiations as the 9 July deadline approaches. So far, only two countries—China and the UK—have signed trade deals with the US.
India and Japan are expected to be the next countries that could strike trade deals with the US.
On Friday, Trump said that the White House was looking into an agreement with India that would give it the 'right to go in and trade' with the country.
Meanwhile, a PTI report, quoting sources, suggested that India-US trade negotiations for an interim trade agreement are progressing well.
A favourable trade deal could boost market sentiment, propelling the Nifty 50 to fresh highs.
"One big kicker for the market is the long-awaited US-India trade deal. A lot is expected, and more than anything else, expect the uncertainty to die. Business will be back to normal," said Arun Kejriwal, Founder of Kejriwal Research and Investment Services.
Q1FY26 earnings are expected to be better due to lower inflation, three successive rate cuts by the RBI and healthy macroeconomic growth.
"The larger section of companies is expected to benefit from three successive rate cuts by the RBI. The impact of the first two cuts will be felt on corporations' bottom lines, which should help in better earnings," said Kejriwal.
Healthy earnings of Indian corporates will ease the concerns over elevated valuations and drive the market to the 26,000 mark or even beyond.
The IMD has predicted an above-normal monsoon this year, which is expected to keep food inflation under control. Lower inflation would raise the prospects of further rate cuts by the RBI and reduce input costs for corporates, thereby augmenting their profitability. A healthy and evenly spread monsoon will also underpin market sentiment.
G Chokkalingam, the founder and head of research of Equinomics Research Private Limited, pointed out that cumulative rainfall is also in surplus so far.
"As of this morning, cumulative rainfall as of yesterday in June is 8 per cent above the long-term average rainfall. This is a highly positive development for the markets. It can help the output of the agricultural sector to grow significantly and thereby help the overall GDP to grow faster," said Chokkalingam.
"A successful monsoon helps in moderating or keeping in check crop prices, and therefore inflation rates tend to remain modest. Already, both retail and wholesale inflation rates are at record low levels. Therefore, a good monsoon would help in the continuation of the reversal of the interest rate cycle in the economy. The same would help both the economy and corporate world to gain from improvements in aggregate demand in the system," said Chokkalingam.
The dollar index is hovering near its 52-week low. If it remains in this lower range for an extended period, it could potentially trigger healthy foreign capital inflows into the Indian market, driving it to new highs.
"We are looking at 28,000 by the year-end with the potential of upward revisions as markets price in a move to a dovish Fed in 2026. The falling dollar will drive better inflows into emerging markets, and India stands out as a winner there as well. A good monsoon and lower interest rates should create the growth momentum for this year," said Srivastava.
Experts say if the index holds above 25,700 decisively, it may reclaim the 26,000 mark soon.
According to Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, the 25,700–25,900 zone is likely to act as immediate resistance.
"A convincing breakout above this range could pave the way for a new leg higher. However, any close below 25,300 would signal a failed breakout," said Patel.
Kejriwal said that the Nifty 50 index won't climb to the 26,000 mark quickly without supportive news flow. On the support side, Kejriwal said the 25,200 mark would act as strong support.
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A convincing breakout above this range could pave the way for a new leg higher.
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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.