Nifty hits 16,500, Sensex scales Mount 55k; what’s next?

Market Outlook

Friday the 13th is not the stuff of nightmares, at least not for the Indian stock market. In fact, August 13, 2021 was a dream day, as the Nifty hit a record high of 16,500 and S&P BSE Sensex zoomed past the 55,000-mark for the first time.

For the week ended August 13, the Nifty50 rose 1.8 percent and the Sensex more than 2 percent. The momentum is here to stay and investors should not go contra from current levels but they can book some profits, experts say.

The rally did wobble mid-week when the BSE came out with a new surveillance framework to counter price volatility in mid and small-cap stocks but a timely clarification from the stock exchange helped the bulls to take back control.

Foreign institutional investors have also turned net buyers, which is a positive sign. They poured in nearly Rs 3,500 crore in the cash segment in August, so far, Moneycontrol data shows.

As long as the Nifty stays above 16,000-16350, the rally can stretch towards 17,000, while for the Sensex, it can be towards 57,000.

“The benchmark index has broken out of a two-month-long consolidation phase, triggering the resumption of an uptrend. A breakout from such a long consolidation phase usually has a sustained and prolonged up move,” Aditya Agarwala, Senior Technical Analyst, Yes Securities, said of the Nifty.

“Therefore, any minor decline or profit booking can be utilised as an opportunity to enter the market for targets of 17,000-17,500. Charts suggest it is time to ride the moment and not stay away.”

Indian markets outperformed their peers in the week gone by and the momentum seems to favouring the bulls.

The Nifty is not trading in an overbought territory nor are there signs of negative divergences. A rise in Covid cases and taper talk from the US Fed though can cause a knee-jerk reaction.

“If we look at a bigger picture then we are very much a buy-on-dips market. However, the dips could be considerable and difficult to project at this point in time,” Mehul Kothari, AVP–Technical Research, AnandRathi, said. But there are certain cues that suggest that traders need to be extra careful with the short term, Kothari said.

“We have hit our milestone of 16400. We also expected a corrective move but that happened in the individual stocks. Now, for the calendar year, the Nifty still has some room left on the upside,” he said.

If the bank index, too, joins in, the Nifty can scale 17,000. “With respect to the BSE Sensex index, 57,000 could be seen,” he said.

One needs to be vigilant while riding the momentum since it is difficult to gauge the sectors that can participate on the upside, Kothari said.

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