If you are long-term investors then just sit tight and enjoy the ride as Nifty may well break the recent record high of 9,218 to continue its journey towards mount 11,000.
The optimism about the strength of the rally has only grown louder on D-Street in the last one week as experts set a tall target for the Nifty50. If you think the market has made an intermediate top and is the right time to book profits, well you be wrong.
Three experts interviewed by CNBC-TV 18 in the last one week said that Indian market is on track to hit fresh record highs which could take the index to 9,400-11,000 in next 4-16 months.
Gautam Shah, Associate Director & Technical Analyst at JM Financial believes this is still a nascent stage of a bull market and sees no reason to book profits. He highlighted the manner in which indices have achieved key levels and that is noteworthy.
Shah has positive targets for the Nifty going forward. He has set a near-term target of 9,500 for the Nifty in 4-6 weeks. “In the medium term, he sees the index touching 11,000 level in 12-16 months,” he told CNBC-TV18.
The Indian market has already registered a 10 percent rally so far in the year 2017 and about 15 percent from the December low of 7,900.
There are a lot of positive which are working for Indian markets. There is abundant global and domestic liquidity, crude is trading near $50, the rupee appreciated against the US Dollar in 2017, stable December quarter numbers from India Inc. despite demonetisation and robust macroeconomic data.
On the political front, the ruling party managed to gain a majority in Uttar Pradesh earlier in the month of March which would help them in pushing the reform agenda smoothly boosted sentiment.
With the ruling government now able to head the states that went to poll recently, there is optimism among investors over stability in the political environment and governance going forward, believes Vineet Bhatnagar, MD, PhillipCapital.
“The liquidity is good but there is a bit of uncertainty on US interest rates and on how the rupee is likely to behave. The market could trade in a band of 8,600 on the downside and 9,600-9,800 on the higher side in the next 3-6 months,” he said.
Although, most experts are worried about stretched valuations in Indian markets but nobody seems to be complaining. The global liquidity is enough to keep markets floating for some more time, but it nowhere close to the euphoria we saw back in 2008.
“Markets are still very much being driven by global liquidity and that liquidity is appearing in all across the region. What that is doing is it is pumping this money right across the region,” Mohammed Apabhai, Head of Asia trading strategy at Citigroup Global Markets in an exclusive interview with CNBC-TV18.
The emerging markets did outperform developed markets so far in the year. It is about 7 percent, put that into context over the last five years, emerging markets have underperformed developed markets by something like 70 percent.
“We do not think the underperformance is going to reverse but at least this is the time when the market becomes a little bit more hopeful and we still think that there is some upside in the Indian markets maybe 9,575-9,600 and it may happen within the next four-six weeks even,” said Apabhai.
Sectors & Stocks to bet on:
Vineet Bhatnagar, MD, PhillipCapital
There is still a lot of optimism in RIL and names like HDFC Bank, ICICI Bank. There could be some amount of rerating that could happen in the IT sector which could propel some good movement behind the heavyweights in the IT. (Disclosure: Reliance Industries owns Network 18 that publishes Chillicious.com)
Fast moving consumer goods (FMCG) whether demonstrated through ITC or other names, could always remain as a company with strong mote, always supporting deep domestic demand remaining robust.
Gautam Shah, Associate Director & Technical Analyst at JM Financial
FMCG as a sector would be an underperformer while Power could outperform. If somebody is over weight in their portfolios in IT, pharma and FMCG sectors, it makes sense to get out. It is not that they will fall but just that they might not come up with the pace of some of the other sectors which are likely to do much better.
Power as a sector as really underperformed for almost seven years now and the risk-reward situation is looking attractive now.
The capital goods which has sort of been an underperformer in the last couple of months has now started to look extremely positive on the charts and that is an Index that could potentially give you about 20 percent upside over the next six months.
(Views and recommendations given in this section are analysts’ own and do not represent those of Chillicious.com. Please consult your financial adviser before taking any position in the stock/s mentioned.)