After The Bell: Sensex, Nifty hit record highs; what should investors do on Thursday?

Market Outlook

Tracking positive global cues, bulls remained in firm control of the markets pushing benchmark indices to fresh record highs in the second half of the trading session on January 20.

The S&P BSE Sensex hit a high of 49,9874 while the Nifty50 inched closer towards 15,000 to hit a high of 14,666.

Sectorally, the action was seen in auto, IT, energy, industrials, and consumer discretionary stocks while profit-taking was seen in FMCG, and telecom space.

More than 250 stocks hit a fresh 52-week high which includes MRF, Bajaj Auto, Eicher Motors, TCS, Apollo Hospitals, and Tata Elxsi.

Positive global cues and stable Q3 earnings revived the bullish sentiment on D-Street after two sessions of declines in the last four sessions.

“An optimistic western market aided the Indian market to touch lifetime highs with new buying in segments like Auto, IT and PSU Bank. So far, the Q3 results are better than forecasted and this has led to continued buying across sectors,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.

Here is what experts think that investors should do on January 21:

Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities

The market has witnessed a complete reversal formation by closing above the high of the previous day, which was at 14,459/49,122. On Wednesday, all the sectors except FMCG closed in positive territory. The market breadth was extremely encouraging. An unusual surge in the Hang Seng helped other Asian markets to trade higher.

Along with Asian markets, today’s performance of US markets would decide the next course of action for our markets.

Gaurav Dua, Sr Vice President, Head Capital Market Strategy & Investments, Sharekhan by BNP Paribas

Sensex is at the doorstep of an important milestone of 50K mark. What a journey it has been for the benchmark index from 100 mark (on April 1979) to 50,000 mark in January 2021, which amounts to a compounded annual returns of just shy of 15.5 percent over the period of last 43 years.

Clearly, equities as an asset class have exceeded returns from all other asset classes over the last four decades and the journey highlights the importance of equities as an essential component of all investor portfolios.

We are at a cusp of a new economic cycle and business uptrend in India. The pillars of the long-term equity rally are in place, i.e., low-interest rates, bank balance sheets on a mend, significant policy reforms along with the recent focus on attracting foreign investments and developing the Indian manufacturing sector.

S Hariharan, Head – Sales Trading, Emkay Global Financial Services:  

Cash market volumes have shrunk this week as indecision has set in among institutional investors.

The Union Budget is the next major event that traders would be focusing on. PSU Banks and Capital Goods sectors have attracted fund flows, in anticipation of announcements for these sectors.

IT sector results beat expectations but existing long positioning acted as an overhang. In the meantime, FII flows which had been the primary driver of price performance, have slowed and appear poised to stay muted for the next couple of weeks.

Rohit Singre, Senior Technical Analyst at LKP Securities

“One more positive session along with that index made fresh levels today and closed the day at 14,645 with gains of nearly one percent forming a bullish candle for the second consecutive day.

Now, a good base is created around 14,560 followed by 14500 zone. If index holds above the said levels, it can show some more positive move towards 14700-14750 zone. Also, any dip near 14500 zone will be again buying opportunity.

In Nifty bank, a strong hurdle is still at the 32700 zone. Any decisive break above 32700 zone can quickly push the index to the 33k zone.

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