India’s equity benchmarks the 30-pack Sensex and the broad-based Nifty staged a strong comeback from the lows of June in recent weeks, closing in on all-time highs they hit in October 2021 but since then, they have faced stiff resistance.
The Nifty is trading near 17,500, 6 percent away from the peak of 18,604. Similarly, the Sensex is hovering around 58,900, again 6 percent away from its all-time high of 62,245.43.
Manojh Vayalar, VP, Equity Derivatives, Religare Broking, said the probability of the Nifty hitting an new high was around 50 percent but there was a very good chance of consolidation at current levels.
“The Nifty has staged a good comeback rally from 15,500 levels just two months before, so a time correction can surely be the trend in the next one or two months. So we expect some consolidation in the index now,” said Vayalar.
He has set a target of around 18,600-18,800 for this calendar year.
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The index has been trading above both 50-day moving average and 200-day moving average for a while now, which shows strength in the rally.
But after two months’ of bull run, with some corrections in the middle, markets across the world are seeing profit booking. India is no exception.
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Some analysts have started downgrading earnings estimates. ICICI Securities slashed forward estimates for the Nifty earnings by about 2 percent. The earnings would grow at a compounded annual growth rate (CAGR) of 13.3 percent, it said.
“This (Nifty hitting all-time high) seems difficult going by the fact that the Nifty seems to have begun a short term correction since Friday,” said Deepak Jasani, Head of Retail Research, HDFC Securities. “From now till the end of the calendar year, the Nifty could see upsides of 18,100 and downsides of 15,850.”
Much of the market gains in the last few months have been on the back of banking and financials. This is also reflected in increased weights of the banking, financial services and insurance (BFSI) segment in Nifty to 36 percent, up 33 basis points (bps) compared to May.
IT and oil & gas have seen a reduction of weight by 60 basis points (bps) and 74 bps during the period. FMCG, which is the fourth-largest sector in the index, has seen an addition of 25 basis points. One basis point is one-hundredth of a percentage point.
Vinod Nair, Head of Research at Geojit Financial Services, refused to predict the course of the market in the short term but said that considering the factors at play, the trend can continue, given the rise in foreign institutional and domestic inflows, especially for small caps.
“On a yearly basis, we have a base target of 18,000 for Nifty50 with a peak of 20,600 on a one-year forward basis,” he said.
At 11.34 am, the Sensex was trading five points higher at 58,778.5 and the Nifty was up 16 points at 17,507 in what was shaping to be a volatile session.
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