The week gone by witnessed strong gains for the Indian market benchmarks amid positive global cues, robust FII inflows, encouraging macro-economic prints and better-than-expected September quarter earnings of India Inc.
The S&P BSE Sensex rallied 5.75 percent while the Nifty50 rose 5.3 percent for the week ended November 6, compared to a 3.3 percent rise in the S&P BSE Mid-cap index, and about 2.2 percent gain seen in the S&P BSE Smallcap index in the same period, data showed.
Joe Biden, 77, is set to become the 46th president of the United States. Democrat Party candidate Biden has defeated incumbent Republican US President Donald Trump in the closely-fought presidential election. Senator Kamala Harris, 56, who is of Indian origin, has become the first-ever woman vice president-elect of the United States.
Analysts believe Biden’s victory is most likely to be a favourable outcome for markets as it will instill confidence amongst investors by reducing policy uncertainty.
Read more: What does Joe Biden's victory hold for the Indian market?
As the dust around the US election has settled, the market is expected to focus on earnings, economic trends and global cues to decide its course.
Let's take a look at how top analysts foresee the mood of the market for the coming week:
Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services
Investors are taking relief from the fact that there are high prospects of the US policy gridlock which would greatly favour some industries while also restraining government borrowing.
Further, the US Federal Reserve kept its key interest rate unchanged near zero and reaffirmed its readiness to do more to support the economy.
Nifty formed a bullish candle on the weekly scale and it is likely to witness an up-move towards its lifetime high of 12,430-12,500 while support exists at 12,000-11,900.
Volatility has significantly cooled down which gives stability to the bulls in the market to ride the momentum.
The overall structure of the market remains positive. With the economic activity recovering fast, more earnings upgrades cannot be ruled out. Further strong global markets can keep the liquidity abundant in the system, thus providing support to the overall market.
Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel Broking
We can see a ‘Bullish Flag’ breakout happening along with a ‘Breakaway Gap’ on a daily chart. It is considered a strong development and hence, we are likely to move beyond previous highs soon.
So, 12,430.50 is the first level to watch and post then the theoretical target of the ‘Flag’ pattern is around 12700. Further levels can be projected as we move forward. Last Thursday’s gap area of 12,027.20 – 11,929.65 should act as strong support.
Dharmesh Shah, Head – Technical, ICICI Securities
We reiterate our constructive stance of Nifty retesting life highs of 12,400 by December, as the market panned out on expected lines. In the upcoming week, we expect a broader market to witness catch-up activity as the Nifty Midcap index resolved out of two months' consolidation.
Structurally, despite elevated global volatility during the week, Nifty managed to hold the key support threshold of the 11,600-mark and staged a strong comeback, indicating elevated buying demand.
As a result, the index maintained the rhythm of not correcting for more than a single week since May low (8,806), signifying inherent strength.
The ongoing structural improvement makes us confident to revise the support base at 11,800 as it is 61.8 percent retracement of ongoing up move (11,535-12,280), at 11,820.
Nirali Shah, Senior Research Analyst, Samco Securities
Broader markets, especially small-caps, remained hesitant to join the current exuberance by benchmark indices.
It is quite likely that these small-cap constituents would plausibly partake in the run-up to Diwali. The long wait for another round of stimulus around Diwali from the Indian Government seems far-fetched and all hopes seem to be dying given that Bihar elections have also concluded.
This may not bode well for the domestic market and would bring in disappointment once the euphoria around the US election subsides.
Given the immense liquidity being flushed in the global economy, it would be appropriate to accumulate metals and materials stocks, asset-light real estate players, resilient private sector banks and well-capitalized smaller NBFCs which have momentum left for a likely upside.
Investors are advised to continue to remain invested in quality stocks.
Ajit Mishra, VP - Research, Religare Broking
Markets are currently riding high on global optimism and favorable earnings announcements. As a result, the benchmark indices have also reached closer to their record high.
We might see a pause early next week but the bias would remain on the positive side and there will be no shortage of trading opportunities.
However, we feel traders should maintain extra caution in the selection of stocks as we may continue to see volatile swings across the board.
Joseph Thomas, Head of Research - Emkay Wealth Management
The frontline indexes moved up further today, and a rally was seen in all major sectors except FMCG, auto and healthcare.
The market seems to be quite happy about greater certainty about US policies in the coming days.
However, it is a fact that the markets have moved up too fast in a too short time, and this calls for a focus on quality stocks and actively managed portfolios.
The final outcome of the US election, the state of the pandemic, and the future course of the Indo-China border conflict are factors that are relevant to the trade trajectory of the markets in the coming weeks.
Vinod Nair, Head of Research at Geojit Financial Services
Indian benchmark indices have continued their strong momentum amid increasing concerns of the pandemic which was supported by a good set of quarterly numbers.
The majority of gains for the index were contributed by the Banking sector given good growth in collections and assets.
Further, volatility was very high over the week as the US election acted as a catalyst for the same.
Markets are currently awaiting next week’s data on inflation, foreign trade and manufacturing.
We expect trade and manufacturing to improve as the current economy is normalising while inflation is expected to remain above target levels.
Sanjeev Zarbade, VP PCG Research, Kotak Securities
Positive macroeconomic data on core sector growth, rebound in GST revenues and robust power demand is driving economic recovery. Earnings announcements have also been largely and many of the frontline companies in IT and private sector banks have reported higher than expected profits.
All this has boosted investor sentiment. Going ahead, we would sound a word of caution as valuations are almost fair. At this juncture, investors are advised to be wary of the market correction. Don’t rush to buy just because markets are making new highs, is our suggestion.
S Ranganathan, Head of Research at LKP Securities
The coming week promises to be as volatile as the last few weeks, led by global cues. Back home, we expect the pharmaceutical sector to be in the limelight, led by some earnings upgrades and superior product mix for some of the large pharma names during Q2.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.