A historic day for the Indian market with benchmark indices crossing key levels as emerging trends suggest continuity of the reform process, stability on the political front, and PM Modi-led government for the second term.
The S&P BSE Sensex zoomed more than 1,000 points intraday to cross the 40,000 level while Nifty 50 surged over 300 points to hit a record high of 12,041.15 on May 23.
The Indian market hit a fresh peak on the Lok Sabha election results day and going by the commentary from various experts there is more room for upside in the next 12 months. The S&P BSE Sensex could well touch 41,500 while Nifty 50 could well head towards 12,300-13,000 levels in the same period, according to experts.
“After a thumping victory, we feel that by Diwali (2019), headline indices are likely to make new highs. The Nifty is likely to extend upside to 12,600 levels. On the downside, if global headwinds play out, it may re-test 11,200,” Dharmesh Kant, Head - Retail Research at IndiaNivesh Securities told Moneycontrol.
“So the likely broad range for Nifty in 2019 will be 11,200 to 12,600. The most probable scenario will be sideways consolidation in headline indices, where corrections will be bought into,” he said.
According to Vivek Ranjan Misra- Head of Fundamental Research at Karvy Stock Broking, the market could take a breather after hitting a record high.
“We expect that after one to two quarters there should be a resumption of a rally in markets as the economy and corporate earnings improve. We expect the market to end the year higher with the Nifty in the range 13,000-15,000,” he told Moneycontrol.
The S&P BSE Sensex has rallied by over 15,000 points since May 26, 2014, to climb Mount 40K but has some more room on the upside and can well touch 41,500 in the next year.
It will not be a one-way rally though and investors should wait for dips before initiating long positions. The big trigger now for markets will come in the Budget from Modi 2.0 government in July.
Investors and traders are advised to book profits in their long positions and wait for dips to get into quality names. Investors can also look at quality midcaps and smallcaps that are trading at better valuations than market heavyweights.
“Consensus on the big upward rally on the victory of BJP lead NDA can be used for unwinding long positions on market heavyweights like Reliance Industries, HDFC, SBI etc.,” Romesh Tiwari, Head of Research, CapitalAim told Moneycontrol.
“If early trends suggest BJP winning, then the markets may make new highs and the rally we have seen on Monday will continue. In that case, Sensex can attempt to cross 41,500 and Nifty 12,300 and we can see profit booking at that level,” he said.
Do not ignore the risk!
Yes, there is euphoria on the Street. The S&P BSE Sensex touched a fresh record high along with Nifty as well as Nifty Bank, but let’s not forget that we have already rallied by about 4000 points on the Sensex and more than 1000 points on the Nifty so far in 2019.
The risks of earnings, trade tensions between the US and China, a slowdown in the economy, and a slowdown in Capex and some real worries which market has to deal with over the next 12 months.
Ramesh Damani, Member BSE told CNBC-TV18 that BJP is set to win a second election with a thumping majority, which proves Narendra Modi, who will continue as the prime minister, understands common people very well.
After current runaway rally, valuations are too steep. "Lot of stocks in midcap are not working due to earnings concerns, poor visibility and a lot of technology transformation."
On risks, Damani said, NBFC crisis is the biggest risk which Finance Minister has to address domestically. Globally, rattling of the Middle East by Donald Trump is a big risk for all, he added.