Indian equity markets extended gains on Monday amid positive global cues. S&P BSE Sensex was up more than 200 points or 0.38% to sit above 57,800 while NSE Nifty 50 index above 17,200, up 0.28%. Last week, equity benchmarks maintained their winning streak over a second consecutive week buoyed by firm global cues. The Nifty 50 index edged 2.6% higher. However, broader markets relatively underperformed the benchmark as Nifty midcap and small cap gained 2% and 0.5%, respectively. Sectorally, IT, financials, Metal remained at forefront while auto, FMCG took a breather. According to analysts at ICICIDirect, Nifty may hit 17,500 in coming weeks.
Falling VIX augurs well for extension of ongoing rally
Buying demand in the vicinity of 200 days EMA has helped Nifty to recoup some intraweek losses and subsequently surpass analysts’ intermediate target of 17,000 in the previous week. “The weekly price action formed a bull candle carrying higher low over sixth consecutive week, highlighting acceleration of upward momentum with four unfilled gap on the upside over the past two weeks. As a result, after 9 months index closed above previous months high,” they said. The current rally of 13% is larger in magnitude since April 2022.
“Consequently, rallies are now getting bigger along with shallow correction, indicating structural improvement that makes us confident to upgrade target to 17,500 in August while 16,700 remains immediate support,” they added. Traders can use temporary breathers from hereon as an incremental buying opportunity. The fall in India VIX highlights improvement in market sentiment that augurs well for extension of ongoing rally, analysts noted.
Top stock picks
Largecap stocks: SBI, Axis Bank, TCS, Reliance Industries, L&T, Sun Pharma, Tata Motors, Tata Steel,
Bank Nifty may head towards 38,700
Analysts at ICICIDirect expect the Bank Nifty index to maintain positive bias as the rallies are getting bigger in magnitude with shallow correction indicating structural improvement that makes them confident to upgrade their target to 38,700 levels in the coming weeks. The banking index has relatively outperformed the benchmark Nifty during the market correction and the subsequent pullback. “It has registered a breakout above the falling supply line joining highs since January 2021 highlighting strength and continuation of the outperformance,” they said. However, bouts of volatility on account of the volatile global cues cannot be ruled out.
The brokerage report also noted that only a decisive close below 36,808-37,028 would lead to a breather, else continuation of upward momentum. “However, temporary breathers from hereon should not be construed as negative instead dips should be capitalised as incremental buying opportunity,” it said.