Nifty base rises to 19,600 as markets hit new highs, banks may underperform: Sushil Kedia

Benchmark indices NSE Nifty 50 and BSE Sensex made fresh all-time highs on December 4 as investors cheered the BJP's big win in three states

The NSE Nifty 50’s base level may have gone up to 19,600 after the BJP’s sweeping victory in three states, said market veteran Sushil Kedia. However, financials - mostly banking and a number of NBFC stocks - remain the weakest among largecaps, while the chemicals sector is expected to do well, said the founder of Kedianomics.

Benchmark indices NSE Nifty 50 and BSE Sensex made fresh all-time highs on December 4 as investors cheered the BJP's thumping victory. The 30-share Sensex surged over 1,000 points to 68,588, and the 50-stock Nifty skyrocketed over 300 points to 20,603.

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“It is possible that 19,600 may become the new base the same way as in 2014 when markets chose to make 6,000 as a new base for the Nifty 50, with the clear majority that Narendra Modi got after 30 years of political turbulence in India. It reflects a deep confidence in the ability to keep delivering the way they have delivered for 10 years,” said Kedia in an exclusive interview with Moneycontrol.

But, if 19,600 breaks on the downside, then Kedia said that he would seriously re-inspect the entire portfolios, exposures and strategies.

As for the election results, not just Chhattisgarh, but even Madhya Pradesh was a wild surprise for Kedia.

With the addition of Rajasthan and Chhattisgarh to the BJP's double-engine league of governments, including Madhya Pradesh, Uttar Pradesh, Uttarakhand, Gujarat, Maharashtra, Assam, Tripura and Manipur, the whiff of a continuation of the current regime at the Centre has turned stronger.

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“The very short-term traders must do the trading based on levels and not go gung-ho into such a gap-up and buy. But in the long term, these results certainly have a very high chance of putting markets on a totally different permanent upside orbit,” Kedia said.

According to him, the weakest sector going forward in the largecap space include the financials, mostly banks and the number of NBFCS that over the last 10 years started receiving premium sentiments. “We have a major call in Bajaj twins that the 10-year over-valuation cycle is over and over the next two years the stocks may bleed,” Kedia warned.

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