The near-term outlook for Indian equities may be subdued after a strong rally of almost 4 percent on the benchmark indices, with experts suggesting that most of the positives are already factored in and chances of a significant upside from current levels may be subdued.
However, liquidity seems to have returned with both foreign investors and mutual funds on a buying spree, implying markets could see some near-term support.
On Monday, benchmark indices saw a record rally with the Sensex soaring nearly 3,000 points and the Nifty 50 advancing by over 900 points, marking their biggest single-day gains in absolute terms ever.
Easing border tensions between India and Pakistan significantly boosted investor sentiment, along with a significant progress in trade negotiations between US and China.
“Nifty will trade in a range of 22,000 to 25,000 and any movement above the range will face resistance due to the lack of fresh positives,” said Manish Sonthalia, Director & CIO, Emkay Investment Managers.
“One can say that the market is closer to the current top. All the positive factors in terms of US-China, India-Pakistan, rate cuts etc will be factored in over the next fortnight and that could be the top for the markets. While market may still attempt crossing the previous high, but there will be a lot of resistance as earnings have also not been that great,” Sonthalia added.
The close of 24,924.70 on May 12 is the highest so far for Nifty 50 during the current calendar year, and the all-time high of 26,216 was touched in September 2024.
Paras Bothra, CIO & Fund Manager, Ashika investment Managers said Nifty may trade in a rangebound manner with an upward bias, but the real action would be in the broader markets.
“While the Sensex and Nifty have moved up in the recent past, the broader markets have largely underperformed. That could change even though the markets are still in a slightly fear zone with uncertainty playing out. Flows have turned positive and if that continues, we should be fine,” said Bothra.
Even the technical analysts are adopting a cautious tone.
"If the index sustains above 24,850, it could test 25,200 in the short term and 25,500–25,800 in the medium term. Hence, traders are advised to adopt a buy-on-dips strategy as long as the index holds above 24,850 on a closing basis,” said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C Mehta Investment Interrmediates.
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.
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