Benchmark Sensex hit the key 50,000 mark on January 21 just days ahead of the Modi government's third Union Budget of its second term. The index rose to an all-time high of 50,184 and Nifty rose to 14,753 in the same session buoyed by global markets post the new US president Joe Biden's oath taking ceremony.
Hopes of additional stimulus from the new US administration for the Covid-19-hit economy took US markets to record highs on January 21.
The Union Budget which will be presented on February 1 is likely to decide the direction of the market ahead. Currently, Sensex has lost 1,045 points from its all time high on profit-booking and weak Asian markets today after a resurgence of coronavirus infections in China and a rise in cases in Southeast Asia.
The index scaling the 50,000 mark raises questions ahead of the key financial event of the 2021.
Should investors keep booking profit amid the ongoing slide in index or should they bet big on the Budget being presented in the backdrop of Covid-19 crisis?
Business Today spoke to analysts to find out the strategy traders and investors can adopt before the Union Budget 2021.
Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities said, "Below 14750/50185 levels correction is likely to continue up to 14550-14500 /49500-49200. On the other side, 14750/50185 would be the immediate hurdle for the bulls, above the same the index could rally till 14850 /50500."
Deepak Jasani, Head of Retail Research at HDFC Securities said, "Nifty has shown signs of profit-taking after such a rise. Technically, it has formed a Dark Cloud Cover on daily charts, showing possibility of follow on selling. The steepness of selling suggests that the Nifty could keep running into resistance/profit taking over the next few sessions".
Rahul Sharma, Head - Technical & Derivatives Research at JM Financial Services said, Since booking the profit is better than looking at the profit, we advise to take some profits around Nifty 14,800/15,000 levels and keep the portfolio's hedged with Nifty Put Options of February Expiry. As a Budget Strategy for traders, it's best to buy the expectation and sell the realization. Maintain trailing stop loss of 14,440 for positional longs in Nifty."
Vinod Nair, Head of Research at Geojit Financial Services said, "The market is expected to maintain its momentum and remain expensive given ample liquidity and high earnings growth. Going ahead, domestic market will keep a track on high budget expectations and global market, which will focus on the policies to be adopted by the new president of the US."
Devang Mehta, Head Equity Advisory, Centrum Broking said, "The biggest missing link for the past five years has been absence of earnings growth. It seems evident that India's listed corporates will exhibit robust earnings growth over the next couple of years. However, one should not get carried away with index levels. It is of paramount importance to stick to a disciplined approach of buying and holding on to great businesses and eliminate undeserving names in the portfolio."