Is Sensex, Nifty rally here to stay? What investors must watch out for

After the Sensex hit an all-time high this morning and the Nifty nearing its record high-mark, experts caution that the rally could be losing steam in the coming days.

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After the Sensex hit an all-time high this morning and with the Nifty nearing its record high mark, experts caution that the rally could be losing steam in the coming days. “I feel that the signs of exhaustion have started to show up on the Index. The up-moves over past few days have come with bearish divergences on the lead indicators which are clear signs of exhaustion. Even if the up-moves continue, we may see momentum being lost over coming days. There are high probabilities that the markets show some corrective tendencies from current levels,” Milan Vaishnav, consulting technical analyst told Financial Express Online. At the day’s high Sensex moved past 39,000-mark for the first time ever to 39,028.67, while the Nifty hit an intra-day high of 11,715.65.

According to investment advisor Sandip Sabharwal, we could see some wariness in the rally. “April is a month of results season as well as pre election moves. As such we could see some wariness set in after the strong upmove of the last 5-6 weeks,” he told Financial Express Online. However, select sectors and stocks could continue to do well like PSU banks and cement where price uptick seems to be sticking now, he said. 

Also read: Modi wave bringing foreign investors back into market; FII inflows take Sensex to all-time high

Vaishnav notes that as the rally may slow down in the coming days, investors must protect gains. “There are few rallies which are better not chased and on the contrary, should be used for protecting profits and taking some money off the table,” he said. 

While the consensus view is that pre-election optimism on hopes of the return of Narendra Modi is propelling that rally, Saurabh Mukherjea said that the rally has little to do with elections. “The global risk-on has been triggered by the Western central banks saying that they will keep monetary policy loose for longer. With our central bank also likely to take a similar line, we have joined the global bandwagon,” Mukherjea  said in a note to Financial Express Online.

On similar lines, Sanjiv Bhasin of IIFL said that India is just playing catch-up in a global rally. “I am very bullish on the market, and expect Sensex to hit 40,200 in the near-term. Everyone will wait for the election results and post that I expect Sensex to touch 42,500 by 2019-end,” Sanjiv Bhasin, Executive Vice President- Markets, IIFL said in an interview to Bloomnerg Quint.

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