Market scales new peak: Biden's victory, Q2 earnings, FII inflows keep sentiment high

Equity benchmarks Sensex and Nifty hit their fresh all-time highs of 42,566.34 and 12,451.80, respectively, in morning trade on November 9.

The Indian market is teeming with positivity as investor sentiment is high owing to strong September quarter earnings, strong foreign fund inflow and Joe Biden's victory in the US Election 2020.

Signs of improvement on the macro front have also boosted investor sentiment. Positive macroeconomic data on core sector growth, rebound in GST revenues and robust power demand is driving economic recovery.

Marker experts see the possibility of Nifty scaling fresh peaks in the run-up to Diwali.

Market experts are of the view that one should not miss the opportunity in this market. A prudent stock-picking can give stellar returns in such markets.

"Let's ride the wave because there is abundant liquidity and the banks which were the most under-owned class is leading from the front now," said Sanjiv Bhasin, Director at IIFL Securities.

Bhasin underscored that the market may see further gains as FIIs are buying strongly, the rupee is stable, bond yields are low and Joe Biden's administration is expected to be less vindictive and restrained on rhetorics so the business could be as usual.

Bulls have painted the Street green and pre-Diwali fireworks have been witnessed in the Indian markets.

Biden's victory in the US is also seen as positive for the Indian market.

According to Jim McCafferty, Global Markets Research at Nomura, a Biden win will bring longer-term certainty, not just for the US but for the rest of the world.

Under Biden's presidency, there would be a significant reduction in the US-China rhetoric.

"On balance, under Biden too, a China trade war is likely to continue, but his intention of the rebuilding of alliances elsewhere (against levying tariffs) is most likely to suppress corporate business uncertainty, that has been disrupting business sentiments. Thus, his victory can be perceived as growth positive in the medium-longer term," said brokerage firm Centrum Broking.

The brokerage also believes Biden’s victory is positive for risky assets including emerging markets (EM) currencies.

On the front of foreign fund inflow, foreign institutional investors (FIIs) have been on a buying spree in the Indian market and the trend may continue for days to come, say experts.

In the cash segment, FIIs have pumped in Rs 13,399.41 crore into the Indian market in the month of November so far, data available with Moneycontrol showed.

Read more: FIIs remain bullish on Indian market; trend likely to sustain, say experts

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.

"The markets are taking hope and conviction out of the massive performance that we have seen out of the corporate sector in India in this quarter. We have seen some very stunning numbers across market segments in most sectors. It is very surprising to see the kind of performance that corporate India has delivered. It is something which we have never seen even pre-COVID," said Taher Badshah, CIO–Equities, Invesco Mutual Fund.

Analysts are expecting those Q3 earnings to be much better than Q2 and see the strong possibility of earnings upgrades.

Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services said with the economic activity recovering fast, more earnings upgrades cannot be ruled out.

While a volley of factors appears to be keeping the market sentiment higher, experts advise investors not to get carried away and make their moves prudently.

"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," said Sanjeev Zarbade, VP PCG Research, Kotak Securities.

Ajit Mishra, VP - Research, Religare Broking is of the view that 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.

"We feel traders should maintain extra caution in the selection of stocks as we may continue to see volatile swings across the board," Mishra said.

The overall structure of the market is positive but it has to be seen if Nifty holds altitude.

Bhasin of IIFL Securities is of the view that there may be some profit-booking but a sharp correction is unexpected. He believes Bank Nifty may touch 28,500 levels while Nifty is likely to hit 12,700-12,800 by this Christmas.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.