NEW DELHI: After BSE Sensex scaled the peak of Mt 60K on Friday, sending Dalal Street into celebration mode, many have started party preparation for Nifty’s ascent to 18,000 level.
The rally in the domestic market has been driven by positive global cues, strong inflows by FIIs/DIIs, good corporate earnings, falling Covid-19 cases, upbeat corporate commentaries and a low cost of capital. Analysts say as long as positivity remains intact, the market has no reason to look back.
“Given rich valuations, one cannot ignore intermittent volatility – however we expect the positive momentum to continue on the back of improving economic activity and recovery in corporate earnings,” said Motilal Oswal, MD & CEO, Motilal Oswal Financial Services.
It is not the question of if, but when the Nifty50 index will hit the 18,000 mark. Overall, analysts are confident that the market will continue to gain in the medium term. However, a profit booking in the short term may delay the party for investors.
Some analysts have spotted weakness in recent market data sets. Advance decline ratio for Sept 24 fell deeply into the negative, suggesting nervousness among the market participants about the broader market.
“Nifty is now close to 18,000 and once that round number is achieved we could see a broad-based correction in the markets. The 17,645-17,792 band is the support for the Nifty,” said Deepak Jasani, Head of Retail Research, HDFC Securities.
On Friday, Nifty hit a life-time high of 17,947.65, but a profit booking sent the index lower at 17,853.20 by the day’s end. The 18,000 level remains a key hurdle. Given the market movement, in the short term, cautiousness has seeped in. Many analysts advise investors to not be aggressive at the moment, but wait for dips.
“Traders are advised not to create aggressive longs at current levels, rather maintain a bullish bias and initiate longs on dips or around immediate supports,” said analysts at Samco Research.
Rahul Sharma, Co-Founder, Equity99, also echoed a similar thought. “Markets are at lifetime highs and have reached very high levels in a quick period of time. Investors are advised to be cautious considering the global situation and keep strict stop loss to their position,” he said.
Auto, IT in focus
The earnings season is also set to start early next month. Hence, IT companies will be in focus ahead of that. Along with that auto names also need to be monitored as companies will come out with data.
“After Accenture has given better than expected guidance for the next year, I expect these stocks to be bullish but investors should be cautious as most large and mid-size IT companies have given massive returns in the last few quarters,” said Gaurav Garg, Head of Research at CapitalVia Global Research.
“Sectoral rotation is expected, and we might see some traction in automobiles as I expect a bounce back in passenger vehicles along with two wheelers ahead of the festive season where we can see decent growth in sales.”
