Nifty 50 may breach current all-time highs and hit 17,200 points in the coming months, while, Bank Nifty may reach 37,700 points.
Nifty 50 may breach current all-time highs and hit 17,200 points in the coming months, according to domestic brokerage and research firm ICICI Direct. Meanwhile, Bank Nifty may reach 37,700 points, the brokerage firm said, adding that there has been a healthy base formation on the banking index. However, temporary breathers have not been ruled out. “Temporary breather after ~8% rally over past four weeks would present incremental buying opportunity to build a quality portfolio from a medium-term perspective,” ICICI Direct said in a report. Nifty reached an all-time high of 16,712 earlier this week.
Buy any dip, Nifty may scale 17,200
“The formation of higher peak and trough signifies the continuance of positive bias,” analysts at ICICI Direct said. The firm believes Nifty 50 could move towards 17,000-17,200 in the coming months as it is the price parity of the past two rallies seen during this year. Since January 2021, Nifty has seen 1,800-points rally twice. In the current scenario, Nifty would complete 1,800 points at 17,200 projected from June low of 15,450. To attain the said levels, a buy on dip strategy has been advised.
On the downside, ICICI Direct does not expect the index to drop below 15,900, which is the earlier breakout area. 50 days EMA is also placed at 15,900.
The banking index has remained range-bound for quite a while now, thus forming a base for the next leg of up move. “We expect the index after the recent healthy base formation to break out above the upper band of the range (36,300) and head towards 37,700 levels in the coming month as it is the confluence of the measuring implication of the recent range (36,300-34,800) and the previous all-time high of February 2021,” analysts said.
On the downside, Bank Nifty is not expected to breach strong support of 34,500. “Buying the declines strategy has worked well over past 15 months. Hence, the current breather would offer incremental buying opportunity in quality banking stocks,” ICICI Direct said.
What to buy?
While Sensex and Nifty scaled fresh highs this week, the midcap and smallcap indices have been correcting. The fall in the broader markets comes after months of outperformance. Keeping this in mind, analysts at ICICI Direct believe that now large-caps will outperform while broader markets undergo higher base formation.
Charts suggest that the IT sector may continue its positive momentum, sitting in the outperform quadrant. TCS, Tech Mahindra, HCL Tech, and Mindtree are seen as potential outperformers while Reliance, Cyient, and Teamlease are pegged as bargain buys by ICICI Direct.
FMCG sector is also placed in the outperform quadrant and is expected to continue moving higher. On the other hand, the Banking sector is now offering favourable risk-reward after having consolidated in the previous month. Axis Bank and Canara Bank are seen to be bargain buys.