Both nifty 50 And the BSE-Sensex ended a short week at its record highs but posted modest gains overall. Even on the basis of two-year forward earnings expectations, the prices of the benchmark indices are now rising sharply, while Market Cap-to-GDP Ratio Earlier this week it surpassed the previous all-time high hit in 2007.
“We have not seen even 5-10 per cent improvement in a long time. That could be on the cards in the next few months, Andrew Holland, chief executive officer of Avendus Capital Public Markets Alternative Strategies, told ET Now earlier this week.
Sanjeev Bhasin, director, IIFL Securities, echoed Holland’s views, but suggested that the market could see a deeper correction in the second half of this month, given the foam that has accumulated in recent weeks. “If you have a position on the trading side, try and hedge yourself but protect your profits,” he told ET Now in an interview earlier today.
However, some market participants are of the view that the current economic environment will make any downtrend in the market a buying opportunity. Brokerage firm Samco Securities argued in a note that all indicators point to a strong revival in demand going forward.
With the festive period in full swing and with the rural economy expected to do well on the back of a good monsoon, money managers are counting on a sharp pick-up in demand in the December quarter.
That said, Ajay Srivastava of Dimension Corporate Finance believes retail investors are waiting to swoop in if the market sees a meaningful correction.
“Whenever there is some pressure on sales from institutions or mutual funds in an order, it is redeemed by the retail masses. This is a very strange time frame that we have seen and there has not been any major institutional presence in the market in terms of incremental investments,” Srivastava told ET Now in an interview.
regional bets
On the sectoral front, information technology stocks continued to rise, perhaps indicating some caution among investors as banking stocks had another weak week.
However, next week there will be more focus on reopening bets like hotel and real estate stocks. Hotel stocks could see further upside today after analysts pointed to a strong revival in bookings for the upcoming travel season.
Real estate stocks that have outperformed over the past two weeks are expected to remain the favorites of retail investors, given strong bookings and depleting inventory in the sector. Kotak Mahindra Bank’s move to offer home loans at 6.5 per cent per annum has also fueled the optimism for the sector.
Technical Outlook
Samco Securities said that the Nifty 50 index has seen a bearish momentum around its rising resistance line, which may indicate a possible reversal in the index next week. “The trend remains bullish and traders are advised to initiate long positions around the dips to reduce the risk of capitalization at extreme levels,” the brokerage firm said.
Ajit Mishra, Vice-President of Research at Religare Broking said that Nifty 50 index may correct for some time and break either side of 17,250-17,400 points could give direction to the market.