It’s a day that will go down in gold in the history of Indian markets. The Nifty hit 20,000 mark for the first time and closed just shy of that key Index level at 19,996. The benchmark Index covered the journey from 19000 to 20000 in exactly 75 days. Interestingly the previous 1000 mark was covered in almost 14 months.
In fact the Nifty is first amongst its peers to hit a fresh high after correction. If we track its upmove from its 52-week low of 16,747.70, the benchmark has soared 19.4% to touch 20,000 in 75 days. If we track the Index movement over the last six months, the Nifty has risen almost 16 per cent and in just one month, it’s traced as much as 2.5%.
The current winning spree in the markets have been dictated by fund flows to a large extent. Macro economic data, steps by RBI to cool off inflation and consistent buying from domestic investors also aided the bull charge on D-street. From March to today, FIIs have brought in inflows worth Rs 19,427.4 crore.
Nilesh Shah MD Kotak Mahindra Asset Management sounded a note of caution while marking the milestone, “Nifty at 20,000 is part of a journey and not a destination. Where yesterday Sensex was, today NIFTY is. Where today Sensex is, tomorrow NIFTY will be there for the long term investors. However in a momentum market one has to be cautious.”
Nifty 50 major timelines
| Levels | Days taken |
| 10,000 to 11,000 | 47 days |
| 11,000 to 12,000 | 84 days |
| 12,000 to 13,000 | 43 days |
| 13,000 to 14,000 | 37 days |
| 14,000 to 15,000 | 36 days |
| 15,000 to 16,000 | 179 days |
| 16,000 to 17,000 | 28 days |
| 17,000 to 18,000 | 40 days |
| 18,000 to 19,000 | 425 days |
| 19,000 to 20,000 | 75 days |
G20 key driver of markets
Many market observers see India taking pole position at the G20 as the potential factors for the sharp upmove in markets. Kaushik Dani, fund manager at PMS, Abans Investment Managers, said that “Resounding success of G20 brings in the desired momentum and market valuations are yet to cross previous peaks. Boost in bilateral trades should benefit various segments like pipes and cables. Sectors like Railways, Shipping and Logistics would be direct beneficiaries of recent announcements.”
Whereas, Dhiraj Relli, MD and CEO, HDFC Securities, attributed this achievement to the investment from local investors and said that, “ Robust flows from the local investors amidst mixed/negative flows from foreigners has helped Nifty achieve this landmark. Successful achievements recently in space and foreign diplomacy by India have boosted sentiments for Indian stocks generally in an era when the global situation is still shaky. SmallCap and Midcap stocks have run up quite sharply and in some cases unjustifiably so. Review of asset allocation and booking some profits/raising some cash is advised. ”
Is market heading to overbought zone
However, that said, some market experts are concerned that the indices are slowly inching towards an overbought position. Shrikant Chouhan, Head of Research (Retail), Kotak Securities said, “. While undertone appears bullish, the market seems to be in an overbought position and hence caution may prevail going ahead. Technically, for the short-term period benchmark Nifty is holding a strong formation. On daily charts, the index has formed a bullish candle and on intraday charts it is consistently forming a higher high and higher low series formation, which is largely positive. For the trend following traders, 19,935 could act as a key support level, above which the index could move up till 20,100-20,175. On the flip side, below 19,935, traders may prefer to exit from long positions and below the same, we could see a one quick intraday correction till 19850-19825.”
Key global factors include, China’s deflation, US rates hike
Commenting on the global factors Vinod Nair, Head of Research at Geojit Financial Services, said that, “Higher-than-expected loan growth data and strong profitability along with lower NPA in PSU banks attracted investor interest. Additionally, expectations of easing inflation, driven by a decline in vegetable prices, fueled optimistic sentiment, leading to a market rally. The return of China from deflation, growth in new bank loans, and reduced concerns about US rate hikes have paved the way for the domestic markets to reach new all-time highs.”
Nifty 50 technical view
Adding to the technical perspective about the Nifty’s journey to 20,000, Rupak De, Senior Technical analyst at LKP Securities said that, “ Bulls continue to lead the way as the benchmark index surged to a historic high, breaching the 20,000 mark for the very first time. Looking ahead, market sentiment is expected to remain upbeat as long as the Nifty stays above the 19,900 level. On the upside, we can identify an immediate resistance zone between 20,100 and 20,200. If there is a convincing breakthrough above 20,200, it could pave the way for the Nifty to advance towards the 20,500 mark.”
Markets likely to continue northwards
The question then is will the markets scale up even higher over the near-term.Commenting on the future prestige of the ongoing trend, Rupak De, Senior Technical analyst at LKP Securities, said that, “We have clearly outperformed our global peers by a fair margin and reaching this milestone on our own, displays the overall inherent strength. We continue to remain sanguine and expect the market to continue this northward move. However, one should avoid being complacent and adopt proper money management from here on.
Sandip Raichura – CEO of Retail Broking and Distribution & Director, Prabhudas Lilladher, said that “20k on the Nifty may just be a number but its history, nevertheless. While we may keep talking about valuations and liquidity, the fact is that a lot is changing in India and maybe the markets are collectively seeing this golden decade ahead very differently from the cynics.”