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Can Nifty hit 18k by December despite COVID risk, inflation, here's what experts say

This rally has more legs, experts believe, as the economy is picking pace while rapid vaccination exercise is giving hopes that the pandemic will be under control by the end of the year.

August 04, 2021 / 11:42 AM IST

The Indian market is teeming with positivity, supported by positive global cues and healthy economic indicators.

Extending the strong rally of the previous session, headline indices the Sensex and the Nifty hit fresh record highs of 54,440.8 and 16,290.20, respectively, in the intraday trade on August 4.

Mid and smallcaps mirrored the sentiment of the frontline stocks. The BSE midcap and smallcap indices also hit their new highs of 23,478.8 and 27,323.18, respectively.

This rally has more legs, experts say, as the economy is picking pace while rapid vaccination exercise is giving hope that the coronavirus outbreak will be under control by the end of the year. The June quarter earnings, so far, have not shown any material impact of the second wave.

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Nifty eyeing 18,000-mark

Experts see the Nifty at 18,000 by December 2021. "We reiterate our Nifty target of 18,000 by December 2021. Corporate balance sheets have been significantly strengthened with record equity raise in FY21. On the revenue front, the listed universe is on firm ground with an accelerated trend of unorganised to organised, digital super-cycle and sustained cost management," said Amar Ambani, Senior President & Research Head, YES SECURITIES.

With accommodative financial conditions worldwide, the mega rally in risk assets would continue, he said.

"We expect the government to continue spending on infrastructure and fast track the reform agenda as we have seen with lowered corporate tax rates, PLI schemes, RBI support, strategic divestments and so on,” Ambani said.

Even though intermittent corrections may occur, the market looks on a long road of gains and it appears that investors do not want to miss this opportunity.

Also read: Nifty's journey to 17,000 could be bumpy, but bull run could lift it to 18,000 by December: Experts

"The 'left-out' feeling in the market is so high that we may see 16,400 before any signs of correction. Enjoy this bull run and don't waste your time in guessing the top of the market," said Sanjiv Bhasin, Director at IIFL Securities.

The reports coming out from China, India’s handling of the second COVID-19 wave and the June quarter earnings indicate that India continues to be in a bull market, Bhasin said.

Also read: With Nifty at 16,000, realty and textile sectors are worth a look, says Abhishek Chinchalkar of FYERS

Retail investor rush

A remarkable factor that is keeping the market aloft is the surge in retail investors. As per BSE data, the number of investors registered with the exchange has swelled to about 7.6 crore, a 45 percent jump year-on-year.

The influx of retail investors is likely to continue due to the easy availability of trading apps and cheap data.

"Front lining of the retail investors is a crucial factor that is supporting the market. It is not the time of the institutional investors but the time of retail and Robinhood investors," said Bhasin.

What about the risks?

While the COVID-19 remains a looming risk and inflation, too, has added to concerns, they are unlikely to deal a serious blow to the rally.

"Worries around the third wave are overdone. More than 50 percent of people are expected to get vaccinated by the end of October. So, I believe the third wave will be more of a fear psychosis rather than an actual occurrence," Bhasin said.

Inflation is a temporary issue, he said. The US bond yields are showing signs of deflation. There is a wall of easy money and the market will remain upbeat due to that, he said.

Experts are of the view that even if the country sees a third wave, it will not be as devastating as the second. The level of immunity is increasing with rapid vaccination.

Central banks are also expected to keep the rates low to support economic growth.

The market looks at a favourable juncture. However, one should stick to quality stocks and avoid the herd mentality, experts said.

Disclaimer: The views and investment tips expressed by investment 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.
Nishant Kumar
first published: Aug 4, 2021 11:42 am

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