Experts are of the view that the Santa rally has already begun and could face some headwinds as we approach 2019-end, but fear not, the pre-Budget rally will resume and take indices to fresh highs
The Indian markets galloped to fresh record highs above 41,800 on the Sensex and 12,293 on the Nifty, which could continue as we enter January amid few days of consolidation.
It was a historic week in which benchmark indices rose to fresh record highs in four out of five trading sessions for the week ended December 20. The Sensex rose 1.64 percent while the Nifty gained 1.53 percent to post its best week since November.
The broader markets underperformed as the S&P BSE Midcap index rose 0.03 percent while the Smallcap closed with gains of 0.4 percent for the week ended December 20.
Despite premium valuation of key indices, the market is making higher highs supported by foreign liquidity as well as hopes of more reforms from the government to support economic activity which plunged to an over six-year low in the September quarter.
There is a wide divergence between the performance of the broader market and benchmark indices. The broad market performance is yet to match the performance of the main indices.
Almost 50 percent of the stocks in the BSE 500 index gave negative returns. On the other hand, as many as 12 companies out of 256 gave a 10-30 percent return for the week ended December 20.
Stocks that gave double-digit returns include names like KRBL, Jamna Auto, Jindal Steel & Power, IFB Industries, YES Bank and Cyient.
Experts are of the view that the Santa rally has already begun and could face some headwinds as we approach 2019-end, but fear not, the pre-Budget rally will resume and take indices to fresh highs, they say.
"The Indian market is in strong bullish momentum and is likely to continue with Nifty likely to touch 13,000 level very soon. This could happen before the Budget itself," Amit Gupta, Co-Founder and CEO, TradingBells told Moneycontrol.
"In the near-term 12,350/12,500 are the immediate target levels while in the downside 12,150-12,050 area has become a strong base where buy on dip texture will continue in the future," he said.
Gupta further added the last six days of 2019 may see some consolidation in the headline index with some positive bias as foreign fund flow may remain muted amid holiday mood, and we could see broader market outperform.
The Nifty is moving upwards amid strong resistance which suggests that there could be a possibility of some consolidation. The market is trying to gain strength and is signaling further upside but volumes are low.
The Nifty index continued its winning streak for the fourth consecutive day and registered a new all-time high of 12,293 level on December 20. The index formed a Doji candle on December 20 and a bullish candle on the weekly chart.
"The momentum oscillator RSI is sustaining above the trend line breakout on a daily scale, indicating continuation in ongoing optimism in the coming days too. Till the time, Nifty sustains above its support zone of 12,150 – 12,200, we may see an up move towards 12,400 levels," Chandan Taparia, Vice President Analyst-Derivatives at Motilal Oswal Financial Services told Moneycontrol.
"Option data suggests a shift in a higher trading range in between 12,100 to 12,350 zones for next coming sessions. India VIX moved up by 1.69 percent at 12.32 levels. Lower volatility could continue to provide the support to the index to attract fresh buying interest," he said.
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