Nifty, Sensex rally on broad-based buying, analysts caution against fresh buys

he earnings growth for the listed universe continues to remain strong, and Indian equities remain preferred investment destinations for domestic and foreign portfolio investors

Benchmark indices Nifty and Sensex snapped out of the recent slump to end firmly in the green on March 21 as market participants cheered the Fed's dovish commentary and hints of three rate cuts this year, starting June.

All sectoral indices were trading with firm gains, reflecting a broad-based optimism among investors. The broader markets also rebounded with the BSE Midcap and the Small-cap indices gaining nearly 2 percent.

The Sensex closed 539.50 points or 0.75 percent higher at 72,641.19, and the Nifty ended 175.70 points or 0.80 percent up at 22,014.80. About 2,554 shares advanced, 817 declined, and 74 were unchanged.

Follow our market blog to catch all the live action

The Nifty PSE index, which tracks the performance of public sector undertakings, jumped over 3 percent with all 20 constituents trading in the green, led by power financiers.

Stocks of oil marketing companies (OMCs) such as BPCL, IOC, and HPCL also extended their winning streak for the second straight day.

With no change in interest rates and the US Fed sticking to guided three rate cuts this year, the market has breathed a sigh of relief, which can be seen from the movement in Nifty50 and Sensex, said analysts.

"We believe that markets are now fairly well placed to generate low teen returns in the coming year after the recent healthy correction we witnessed, especially in the small and mid-cap universe," said Nishit Master, portfolio manager at Axis Securities.

The earnings growth for the listed universe continues to remain strong, and Indian equities remain preferred investment destinations for domestic and foreign portfolio investors, according to Master.

Also Read | Fed must manage rate cut timing judiciously in election year; Oil may top $90/bbl: Peter McGuire

Caution! Avoid fresh buys at current levels

"Investors should exercise caution while investing in equities at the current level and stick to quality companies available at reasonable valuations, avoiding risky ventures without a proven track record," he said.

Ghazal Jain, fund manager at Quantum AMC, believes that while the fundamental backdrop of lower interest rates and geopolitical uncertainty looks supportive for gold, some profit-taking can be done at these levels. "Fresh buys can wait for price dips," she said.

Disclaimer: The views and investment tips expressed by investment 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.