Markets flat after record high move, but analysts expect Nifty to clinch 24,000 soon

Sectorally, Nifty Media was the top performer of the day, followed by Bank Nifty, and Nifty Auto indices

Benchmark indices Sensex and Nifty ended on a negative note on May 24 after they mounted to all-time highs of 75,636 and 23,026, respectively earlier in trade. Though analysts expressed concerns of overbought market conditions, they expect Nifty to soon hit 24,000, supported by rally in largecap stocks.

The Sensex was down 7.65 points or 0.01 percent at 75,410.39, and the Nifty was down 10.60 points or 0.05 percent at 22,957. The market breadth steered towards losers - about 1,413 shares advanced, 1,933 shares declined, and 85 shares unchanged.

Trivesh D, COO at Tradejini, sees promising growth prospects for Nifty to move towards 24,000, albeit with minor corrections on the way. "This rally distinguishes itself by its reliance on adequately valued large-cap stocks, while segments of the market with inflated valuations take a backseat. I believe this trend of large-cap outperformance is anticipated to continue, bolstering the bullish momentum and fostering stability," he opined.

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Deven Choksey, Managing Director of DRChoksey Finserv also agreed. He expects benchmark indices to grow at 20 percent compounded annual growth rate (CAGR) for the next 3 years and thereafter. "We expect largecaps to grow in the range of 18-20 percent in the next 3-5 years, while mid-and smallcaps are expected to grow between 25-50 percent," he said.

Meanwhile, broader markets were mixed on May 24. The BSE Smallcap index reversed earlier gains and dipped into negative territory, while the BSE Midcap index outperformed benchmarks by rising up to 0.3 percent.

Among sectors, Nifty Media was the top performer of the day, followed by Bank Nifty, and Nifty Auto indices. Conversely, defensive pockets took a backseat as Nifty FMCG and Nifty Pharma indices emerged to be the worst performers, declining as much as 0.8 percent on May 24.

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However, volatility continued to be on an uptrend ahead of election results. Fear gauge India VIX shot up by 1.9 percent to 21 level. Analysts view VIX's behaviour similar to the period shortly before the 2019 electoral results announcement.

Despite the prevailing optimism, Deepak Jasani, Head of Retail Research at HDFC Securities expressed concerns over lofty valuations in certain pockets of markets, mixed Q4 results from India Inc, and monsoon trends. "From here on, the market trend will depend on how the FIIs react to election results. While overshoot or undershoot is expected, the fundamentals cannot be justified right now," he added.