The Nifty has been on steroids after sinking to 7,500 in late March 2020, with the benchmark index gaining more than 73 percent in the last eight months to go past 13,000.
Market benchmarks the Sensex and the Nifty scaled fresh peaks of 44,601.63 and 13,079.10 in intraday trade on November 24 as investor sentiment got a boost due to positive reports around the COVID-19 vaccine.
Eventually, Sensex closed 446 points, or 1.01 percent, up at 44,523.02 and Nifty settled with a gain of 129 points, or 1 percent, at 13,055.15.
The COVID-19 pandemic was an unprecedented crisis. For equity markets, too, it turned out to be a force that dominated proceedings. In March, when the coronavirus was wreaking havoc globally and the equity markets were witnessing a series of selloff, nobody would have imagined the economy and the market to show such resilience.
In the last few weeks, three vaccine candidates have shown a lot of promise in the final trials, news that has brought all-around cheer even as coronavirus cases continue to climb.
The Serum Institute of India will first focus on supplying AstraZeneca Plc’s COVID-19 vaccine to Indians before distributing it to other countries, Reuters quoted SII's Chief Executive Adar Poonawalla as saying.
Also read: COVID-19 vaccine | Serum Institute can apply for emergency use if AstraZeneca gets UK nod, says Dr Guleria
Besides, the risk appetite of investors soared after media reports said the US president-elect Joe Biden had begun his White House transition.
The Nifty has been on a volatile track for the last eight-month but after every fall, it gathered momentum and rose.
"We finally achieved the 13,000 levels. It is heartening to see that the Nifty is maintaining above it. The markets would attempt 13,100-13,200 in this rally up, which would be a significant resistance zone. We have good support at 12,700 so any dip can be utilized to accumulate positions for a target of 13,100-13,200," said Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments.
Other than abundant liquidity, hopes of vaccine, better quarterly earnings and government measures to shore up the economy supported the market's ascent.
IT and healthcare stocks have been among the top gainers during this period, while select banking and financial stocks underperformed.
Banking stocks joined the rally after their September quarter earnings showed they held well during the times of pandemic.
Analysts, however, believe much clarity on how banks fared during the time of pandemic and the lockdown, which brought all business activity to a standstill, will emerge only after the December quarter numbers.
Check here for the latest updates on all COVID-19 vaccines
The road ahead
At a record high, the market risks correction as the valuation has to be in sync with the macroeconomic reality, experts said.
"There is a wall of liquidity. However, one needs to be cautious as there may be a faster correction in the market. But, equities remain the best asset class for the next two years," said Sanjiv Bhasin, Director at IIFL Securities.
"December may be a difficult month. I think 13,000-13,200 would be the top for the market by the end of December. This had been our target since the market was near the 8,000 level," said Bhasin.
While there may a correction in the near-term, analysts are positive for the long-term.
"The prospects ahead look quite encouraging as demand across sectors has started to look promising. The reset has had challenges, but it has also brought forth good opportunities, and corporates across the country are gearing to cash on them. So, even though markets are at an all-time high, but the risk to rewards still appear promising for the patient long-term investors," said B Gopkumar, MD & CEO, Axis Securities.
Gopkumar pointed out that the Indian economy is recovering well.
"Credit growth also has started picking up. Electricity consumption, PMI, GST collections, and Eway bill data has been quite encouraging. With the road map for vaccination clearing, the economy will be back to full steam in 2021," he said.
Weeks ago, Global brokerage house Goldman Sachs upgraded India to "overweight" and raised Nifty's 2021-end target to 14,100.
Goldman Sachs is of the view that the market has moved higher as investors gained confidence in the improving economic momentum.
Global brokerage firm Nomura said the Nifty may hit 13,640 by December 2021.
It is of the view that the improvement in sentiment around the pandemic and improving high-frequency growth indicators and corporate earnings as the economy opens up could lead to the market overlooking potential growth concerns that can emerge over time.
Brokerage firm Prabhudas Lilladher is bullish on the Indian market and expects Nifty to hit 14,407 in a 15-month timeframe from mow.
The brokerage firm values Nifty FY23 22 EPS of Rs 724 at 10-year average PE of 19.9 and arrives at a 15-month target of 14,407 (13,830 based on 19.9 times FY23 EPS of 695).
In the bull case scenario, Nifty may touch even 18,000-mark, the brokerage said.
"Although Nifty has traded at 27 times recently, we continue to take the earlier peak of 25 times and arrive at bull case target of 18,094 (16,680 earlier). Economic revival, Sustained global liquidity, low-interest environment and control of COVID-19 pandemic is key to bull case scenario," Prabhudas Lilladher said.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.