Indian share markets benchmarks BSE Sensex and Nifty 50 scaled fresh lifetime highs on Monday, on the back of firm global cues, upbeat Q3 earnings and strong foreign fund inflows
Markets cheered the CPI inflation for January and a rebound in IIP numbers. Image: Reuters
Indian share markets benchmarks BSE Sensex and Nifty 50 scaled fresh lifetime highs on Monday, on the back of firm global cues, upbeat Q3 earnings and strong foreign fund inflows. BSE Sensex zoomed over 550 points to hit 52,000 for the first time ever. Similarly, the broader Nifty 50 index surged 150 points to climb above 15,300 to make new record highs. In the post Union Budget rally, the 30-share Sensex closed above the historic 50,000-mark for the first time on February 3, 2021. It took just two sessions to add another 1,000 points to reach 51,000; and a further five days to hit 52,000.
Markets cheered the CPI inflation for January and a rebound in IIP numbers. Vishal Wagh, Head of Research, Bonanza Portfolio Ltd, told Financial Express Online that the rally in Sensex and Nifty on the upside seems to continue for the time being. As new positions may have lesser risk to reward ratio, Wagh advised to ‘hold’ the positions with trailing stop loss below 15080 on Nifty. “It’s time to ride the rally; a new entry may be risky,” he said.
Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities, sees 500 to 1,000 points retreat in Nifty 50, as the current rally seems to be without any meaningful correction. In the past, whenever the market increased by 1,700 to 2,000 points, it had retreated by 500 to 1000 points. Chouhan believes that Nifty and Sensex can rise to the level of 15500 and 52500, respectively.
Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services, said that buying has to be extremely stock/sector-specific. It should be done on a highly selective note.
Likhita Chepa, Senior Research Analysts at CapitalVia Global Research Limited, told Financial Express Online that before taking a fresh position, one must carefully look at the prospects of the company as most firms’ stocks are trading at premiums. Chepa advised short term investors sitting at considerable amounts of profits to look at squaring off their positions in the existing stocks. Medium- to long-term investors on the other hand must look at asset allocation and rebalance portfolios according to their risk appetite. However, they can hold positions as the rally in the capital markets is expected to continue.
What do technical charts say for Nifty?
Nifty has strong resistance at 15,300 in the form of maximum concentration of Call OI for this week’s expiry as of now, says Milan Vaishnav. On technical charts, the zone of 15300-15500 seems to be a very stiff and strong resistance area. Vaishnav advised that one may look for profit booking in financials, rate sensitive and high beta stocks in favor of traditionally defensive sectors going ahead from here. While on the lower side, supports are placed at 15000 and 14850 for the immediate near term.
Given the strength of the global markets and the CPI inflation figures, Nifty/Sensex can rise to the level of 15500/52500 levels, says Shrikant Chouhan. However, that could be the time to shift the portfolio from weak stocks to strong large-cap companies. “We also advise our clients to keep lowering the cost value of the portfolio by making a profit on investments that are yielding windfall gains. On the downside, support would be at the 15100/51200 and 14800/50300 level,” he added.