The Indian equity benchmarks have seen a great surge in the last few trading months after a 100 percent recovery from the COVID-19 lows. Despite some wild swings in the recent past, the trend seems to be positive and is all set to close the calendar year 2020 on a positive note.
The Indian market has been in a bullish mood amid FII flows and fading fears of coronavirus infection due to a global vaccine rollout. It has definitely raised hopes of a return to normalcy, however, the uncertainty over the discovery of new strains of coronavirus may keep the market participants on their toes.
The Nifty has been on a winning streak for the last couple of months and is trading at all-time highs. Technically, the cycle of higher tops and higher bottoms seamlessly looks in the favour of the bulls, with some obvious blips and bumps on the path. However, a breach of the psychologically important 13,000 could apply some break to the ongoing momentum, whereas on the upside, the Nifty has the potential to reach 14,000 in recent times.
The year was of mixed news flows for the economy as well as markets. Markets tanked in the initial months of the coronavirus outbreak but the day on which the first 21-day lockdown was announced was the bottom for the Indian equities.
As mentioned earlier, the Nifty has recouped all its losses and is trading in an uncharted territory. The consumption-related economic data has already touched the pre-COVID zone, indicating strong demands on consumption and economic recovery. Many global rating agencies, citing economic indicators, have also come forward with a positive outlook and expect the Indian economy to retrace sharply higher in the coming months.
The equity market has witnessed a V-shaped recovery from the day of lockdown and is all set to fire up the charts. Any correction towards the previous lifetime high zone (pre-COVID highs of 12,400-12,500) could be utilised as the best buying opportunity for those who have missed the current historic surge.
The Nifty is expected to test new highs of the 15,000 as we enter the new decade but some correction can't be ruled out amid a choppy global scenario. As mentioned, the 13,000 -ark is a strong support zone while what has not to be seen to date is the re-testing of the breakout from 12,400 (pre-COVID highs) odd zone, thus investors should not panic even if it tests the support, perhaps it should be seen as an opportunity to invest and be the part of the next cycle of historic highs.
The market is expected to witness some short-term blips but the long-term bullish trajectory remains unaffected and the economy-linked sectors are expected to outperform over defensive sectors. At the same time, investors should also focus on disruptors that facilitate the shift to the new normal post-pandemic.
IT companies could lead the next decisive rally that has niche capabilities and could lead the market to test new highs. Above all, once the confirmation about the vaccine gets concrete, huge positive sentiments are likely to drive the ongoing resurgence and the next decade could be taken over by the bulls of Dalal Street.
(Osho Krishan is the Senior Manager - Equity Research at Anand Rathi Shares & Stock Brokers.)Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are his own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.