S&P BSE Sensex zoomed previous 50,000 points on Thursday for the initial time given that its inception. The move is exceptional taking into consideration the March 2020 sell-off which saw the index tank to as low as 25,638. What tends to make the rally in domestic equity markets even more exceptional is the fast move charted by the index, adding the final 10,000 points in significantly less than one hundred days just after it fell to 40,000 at the finish of October. The Nifty as well was observed mirroring the up-move, reaching new highs as it breached 14,700. However, each Sensex and Nifty ended the day with a damaging bias. Many analysts have now been warning of stretched valuations and the milestone Sensex reached today and the quick weakness augments their warning calls.
Charts recommend more upside
Although valuations may perhaps be stretched, on the charts, the rally in equities appears to have more legs for now. “Technically we feel that the market is still continuing series of higher high and higher low. Recently it has formed a higher bottom at 14222 levels. Until the market is not breaking 14200, we could see the levels of 15200,” Shrikant Chouhan, Executive Vice President (Equity Technical Research), Kotak Securities, told TheSpuzz Online. He advises accumulating robust businesses at big supports but at the exact same time lower weak extended positions from the portfolio as an alternative of promoting profit-generating counters.
Although Sensex and Nifty have closed with a damaging bias just after getting zoomed to fresh highs today, the current history suggests at robust shopping for emerging from any weakness and that is maintaining analysts away from advising any contra trades. “Markets remain in overbought territory and there can be some profit booking,” mentioned Navneet Daga, Lead Derivatives Analyst, YES Securities. “We have witnessed that intraday corrections are being normally bought into and we make fresh highs. Overall trajectory also does not suggest any meaningful downward move as falls have corrected very sharply,” he added.
Range bound move till Budget?
With the Union Budget about the corner, volatility is anticipated to move larger with equity markets moving inside a variety. Navneet Daga expects the upside levels of 14,800 to be protected on Nifty till the Budget. On the other hand, Shrikant Chouhan sees India VIX surging to as higher as 28-30 when Nifty moving in a broad variety of 14,000 to 15,000.
The recovery from March 2020 lows to a fresh milestone of 50,000 on Sensex has been aided by enormous foreign fund inflows in the final couple of months and now supported by positive earnings outlook. “Overall we expect the market to continue its upward journey on the back of healthy corporate earnings, strong liquidity, positive developments on the vaccine front, broad-based economic recovery and low-interest rates,” mentioned Motilal Oswal, MD&CEO, Motilal Oswal Financial Services.