After hitting a two-year low of 7,511 in March this year, the benchmark Nifty scaled its all-time high crossing the 13,000 level mark on Tuesday. Thus, it has taken nearly eight months for the Nifty to gain over 73 percent. The Sensex too, meanwhile, has scaled an all-time high level of above 44,500.
The robust gains in the domestic equity market are on the back of positive developments over the COVID-19 vaccine that has boosted investors' risk appetite amid growing prospects of speedy global economic recovery.
The rally has been also fueled by strong and unprecedented foreign capital inflows in the Indian markets which are at a two-decade high. The foreign institutional investors (FII) have purchased a little over 50,989 crore of Indian shares in the month of November itself. With these massive inflows, FIIs have turned positive for the year 2020 till date.
“This unprecedented FII buying is on account of trillions of dollars worth stimulus from global central banks to revive the COVID-19 pandemic-hit economies. The flow of liquidity is expected to continue for the foreseeable future. I do not see any reason for a big correction in the market from here,” said Sudip Bandyopadhyay, Group Chairman, Inditrade Capital.
Bandyopadhyay is of the view that the market will continue to inch higher going ahead and any dips should be utilized as a buying opportunity.
Meanwhile, the strong performance of corporates in the second quarter of fiscal 2021 also drove the market higher. IT, Pharma, Metals, select private banks and NBFCs, cement are among sectors that witnessed significant growth in earnings.
Going ahead, Bandyopadhyay believes that economy facing sectors will do well. He is bullish on cement, automobile and infrastructure sectors. He is of the view that the BFSI sector still has the scope for upside momentum.
Hemang Jani, Head - Equity Strategy, Broking & Distribution, Motilal Oswal Financial Services is of the view that at the current market levels, investors should partially book profits and sit on 15-20 percent cash in the portfolio. Any corrections in the market can be used to deploy funds at lower levels, he said.
“The overall sentiment is strong and the market outlook is positive going forward. If the foreign fund inflows continue we can see higher levels on Nifty in the coming days/weeks. Nifty can possibly touch 13,200-13,400 levels also. But it also depends on the sustainability of the economic growth over the next few months post-festive season,” said Jani.
On the technical side, analysts believe that the Nifty breaking above the psychological level of 13,000 will propel the index higher towards 13,084 and above that to 13,210.
“There is a strong likely hood that the Nifty will trade higher going into the last three days of expiry. Overall, international markets especially US markets are showing signs of revival after a few days of corrective price action. Any spurt in the US markets could be a big catalyst in any further rally in Nifty-50 in the coming days,” said Rahul Sharma, Market Strategist & Research Head, Equity99 Advisors.
Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments said that it was heartening to see that the Nifty was maintaining above 13,000 level.
"The markets would attempt 13,100-13,200 in this rally up which would be a significant resistance zone. We have good support at 12,700 so any dip can be utilized to accumulate positions for a target of 13,100-13,200,” he said.
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