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Last Updated : Nov 20, 2019 04:06 PM IST | Source: Moneycontrol.com

Sensex hits a new high, 4 factors that could be fuelling optimism

Experts say that if the Nifty manages to close above 12,000 for the next few days, the bulls can take the index into unchartered territory.

 
 
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The Indian market created history on November 20 as the BSE Sensex rallied more than 300 points to hit a fresh record high of 40,816 intraday. The index closed at 40,651.64, up 182 points.

The Nifty50 broke above its crucial resistance level of 12,000, but closed tad below the same level, at 11,999.10 with 59 points gains.

Sectors such as healthcare, energy, oil & gas rose 1.4-2 percent, while mild selling was seen in telecom, consumer durables, power, and realty indices.

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A list of factors that could be fuelling the rally in markets:

RIL leads the charge

Reliance Industries (RIL), which is now inching towards a market capitalisation of Rs 10 lakh crore, the highest among the listed companies on the BSE, is the top contributor to Sensex gains.

Reliance Industries share price touched a record high of Rs 1,571.85, rising more than 4 percent intraday after foreign broking house Credit Suisse increased the target price. The stock closed 2.47 percent higher at Rs 1,547.05.

Credit Suisse has maintained a neutral rating on Reliance Industries, while raising the target price to Rs 1,400 from Rs 1,210 per share.

According to the research house, Jio's tariff increase could bring an annual cash flow of more than $1.5 billion, which would help the company achieve zero net debt target by FY21.

Note: Reliance Industries Ltd is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.

September quarter earnings

The September quarter earnings were not a complete disappointment, with most companies reporting in-line or better than expected results.

Tax cuts have positively impacted the earnings in the higher tax bracket. The key positive from the Q2 results season is that even at the operational front (sales and EBITDA) the misses did not exceed the beats and were largely neutral, suggest experts.

“Corporate earnings in the listed space have seen more beats than misses (146 beats; 117 misses and 57 neutral), while the forward earnings of the NIFTY50 index for FY21 and FY22 have been maintained without any downgrades,” ICICI Securities said in a report.

“Despite the larger number of beats, the forward earnings have just been maintained, not upgraded. This could possibly allow the ‘positive earnings surprise’ to continue as it did in the US post the tax cuts,” the report added.

Sharp fall in crude oil price   

Crude oil prices have seen a sharp fall in the last two days, as a surge in US stockpiles reinforced concerns about lackluster global economic growth amid the trade war between the United States and China, said a Reuters report.

Brent crude futures were at $60.87 a barrel. The Brent dropped 3.8 percent during the prior two sessions.

Technical factors

The Nifty reclaimed its crucial resistance of 12,000 on November 20 and was on track to surpass its previous record high of 12,103. Experts say that if the index manages to close above 12,000 for the next few days, the bulls should be able to lift the index to uncharted territory.

The primary trend for the Nifty is bullish as the index is trading above its 50, 100 and 200 DMAs. Higher tops and higher bottoms are well intact. Technical indicators are suggesting that the positional trend of the market is bullish, suggest experts.

"On the technical front, both indices are trading in a rising channel, with the formation of higher tops and higher bottoms, which suggests that the short-term trend is likely to remain bullish," Shitij Gandhi, Senior Technical Research Analyst, SMC Global Securities, told Moneycontrol.

"As long as the Nifty is holding above the 11,800-mark, the trend is likely to remain bullish. On the higher side, any decisive move above 12,000 level will accelerate the buying momentum towards 12,100."

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Nov 20, 2019 11:33 am
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