Nifty could hit record high by December; ICICIdirect names 30 bargain buys

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The Indian market has rallied more than 3 percent so far in November in the run-up to the US Presidential election, and even though the volatility will be high amid US Presidential elections, ICICIdirect feels that we are on the way to hit record highs by December 2020.

In the coming month, we believe global volatility would remain high due to US presidential elections. Historically, it has been observed that such elevated volatility subsequently offers a good entry opportunity.

Over the past two decades, in three out of five US elections, Nifty generated returns of an average 6% (post-election outcome till December), said the report.

The report further highlighted that the ongoing shallow retracement in the index (as shown in the adjoining chart) signifies a robust price structure that makes us confident of reiterating our broader constructive stance and expect the index to retest life-time highs of 12,400 by December 2020.

“Hence, any dips from here on should be used as an incremental buying opportunity as we do not expect the Nifty to sustain below key support threshold of 11,000-11,200 range,” it said.

In the process, ICICIdirect expects the midcap and small-cap space to continue with the catch-up activity in the coming month.

The domestic brokerage firm has picked 29 bargain buys across 10 different sectors that include SBI Life, Cyient, Affle India, Pidilite Industries, Avenue Supermarts, L&T, Siemens, Oberoi Realty and VST Tillers.

In the last month's report, ICICIdirect did mention the price-wise and time-wise correction in the broader market, which has worked well as the Nifty midcap and small-cap indices have seen a rejuvenation of upward momentum along with the strengthening of market breadth.

The broadening of market participation augurs well for the durability of the ongoing up move, which makes us confident of believing the index would maintain its relative outperformance amid the ongoing Q2FY21 result season.