Stock market has breached a new high of 52,000 level on Monday, bringing cheer to equity investors. The benchmark index BSE Sensex has surged 9% year to date. From the lows of March, the index has doubled. Most equity analysts believe the bull run to continue on account of strong Q3 earnings. They believe there is no major negative clue to pull the stock markets down anytime soon.
"The overall trend of the market seems to be bullish. The Indian markets are now expected to follow global cues as the earnings season is nearing an end. There seems to be no major event domestically which could adversely impact the market sentiments. If the current optimism prevails in the market, we can expect Nifty to test its level of 16,000 very shortly," says Likhita Chepa, Senior Research Analyst, CapitalVia Global Research.
NSE Nifty 50 is hovering around 15,328 levels.
Analysts at ICICI Securities see mid cap and small cap category of stocks to prominently outperform. "Small cap indices of developed peers have been resilient with US index hitting fresh life-time high. Strong positive correlation with developed market peers would act as a tailwind for domestic indices. Locally, we expect upward shift in trajectory of small cap index, which is 18% away from life highs. Midcap index already at life-time highs," says Dharmesh Shah, Research Analyst, ICICI Securities.
BSE Mid Cap Index in the last one year has grown by 29%. BSE Small Cap Index has grown by 34% in the same time period.
Sectorally, the brokerage sees telecom, IT, banks and auto heavyweights to lead the Nifty.
While analysts see BSE Sensex further up at 52,500 levels, they expect small hiccups in terms of short term volatility in the stock market. Active equity investors may look at booking these unexpected profits.
"It should not be forgotten that the recent rally has been without any meaningful correction. In the past, whenever the market increased by 1,700 to 2,000 points, it had retreated by 500 to 1,000 points. Given the strength of the global markets and the CPI inflation figures, Nifty/Sensex can rise to the level of 15,500/52,500 levels. However, that could be the time to shift the portfolio from weak stocks to strong large-cap companies. We also advise our clients to keep lowering the cost value of the portfolio by making a profit on investments that are yielding windfall gains. On the downside, support would be at the 15,100/51,200 and 14,800/50,300 level," says Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities.
ICICI Securities believe the Nifty has strong support at 14,600. They do not expect it to be breached. "Any temporary breather from here on should be capitalised on to accumulate quality stocks," says the brokerage.