Sensex, Nifty hit record highs on strong global cues

Analysts reiterated their positive bias and said the Nifty is headed towards 22,700 in the coming weeks.

The Indian market extended gains for second consecutive day on March 7 amid strong global cues, with the Sensex and the Nifty hitting new highs of 74,245 and 22,525.

Analysts reiterated their positive bias and said the Nifty is headed towards 22,700 in the coming weeks.

The Sensex and Nifty eventually settled flat-to-positive at 74,119 and 22,493 . Fear gauge India VIX eased by over 4 percent to trade around 13 level.

ALSO READ: The March effect: 3 reasons why markets tend to be weak in March

"We expect Nifty to head towards 22,700 in coming weeks, wherein largecaps would relatively outperform the broader market as ratio of Nifty vs Nifty 500 has bottomed out," analysts at ICICI Securities said. They advise using dips to buy as immediate support is at 22,000.

On the other hand, Deven Mehata, Research Analyst at Choice Broking forecasted 22,600 and 22,650 as the next immediate resistance for Nifty. "Nifty can find support at 22,400 followed by 22,350 and 22,300," he added.

Broader markets outperformed benchmarks as Nifty Midcap 100 and Nifty Smallcap 100 indices gained up to 0.8 percent on March 7. However, experts warned over elevated valuations.

ALSO READ: India's bond market is in a sweet spot on strong flows

"This trend is likely to continue since valuation in the broader market remains highly elevated and the regulator has sent a clear message regarding the froth in the segment. Therefore, investors have time, even now, to switch from small caps to fairly valued large caps and partly to fixed income products," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Sectorally, Nifty Media index was the top performer as it gained over 2 percent led by Zee Entertainment, Network18, PVR-Inox, and Dish TV.

On the flipside, Nifty Oil & Gas was the worst sectoral performer as it tumbled over 1 percent weighed by losses in BPCL, IOC, Reliance Industries, and Hindustan Petroleum.