Nifty again headed towards all-time high; charts show midcap, smallcap indices may beat benchmarks

By: |
May 03, 2021 11:13 AM

The expected up-move in Nifty 50 would be accompanied by stock-specific action amid quarterly results.

Nifty, Midcap, smallcapNifty could be headed towards 15,400 levels in the coming months.

Nifty 50 may be again headed towards its lifetime high of 15,430 in the coming months, having held a key support level during the last few weeks’ correction, ICICI Direct said in a recent note. The benchmark NSE index was in the correction for the last few weeks but managed to hold above 14,200 during the period. The key support levels were respected despite the fear of revised lockdowns and the second wave of coronavirus. Earlier, Nifty made all-time high in the middle of February this year during the post-budget rally and since then has been moving range-bound with a negative bias.

Buy on dips towards 14,200

“Despite anxiety around surging Covid-19 cases across India, the index managed to hold the key support threshold of 14200 on multiple occasions, highlighting elevated buying demand emerged after approaching maturity of price and time-wise correction,” ICICI Direct said in a note. Since March last year, Nifty has not corrected more than an average of 9% while time wise not extended correction for more than 2-3 consecutive weeks. Nifty holding above 14,200 signals buying interest, as the index has maintained the rhythm above this level.

The expected up-move in Nifty 50 would be accompanied by stock-specific action amid quarterly results. ICICI Direct said that investors should use dips towards 14,200 as a buying opportunity as the 100 days EMA is placed at the said levels.

Broader markets may outperform

Among broader markets, the Nifty midcap 100 has also shown strength and have maintained a pattern of not correcting for more than 9% over two or three consecutive weeks. In the coming weeks, ICICI Direct expects the index to outperform benchmarks. In the smallcap space, the Smallcap 100 has respected the 50 days EMA, since June 2020. “Nifty midcap index has taken a breather after clocking a fresh all-time high, whereas Nifty small-cap index is still ~11% away from its all-time high. Hence, catch up activity can be seen in Small-caps,” ICICI Direct said.

Bank stocks attractive to buy

Banking stocks are seen as bargain buy along with FMCG stocks with a favourable risk-reward setup. Metal stocks are in an uptrend and could continue to perform over the next few months. Similarly, healthcare stocks are also outperforming and are expected to continue moving higher. ICICI Direct said that IT stocks have consolidated and are likely to perform at part with the market.

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