Nifty at record high: Here’s what investors can expect now

Last week turned out to be a historic one for equity markets as Nifty hit a fresh lifetime high of 15,469 on May 28, even as Foreign portfolio investors (FPI) turned out to be net sellers and took out nearly Rs 1,730 crore from Indian markets in May. In April, the total net outflow from both equity and debt stood at Rs 9,435 crore.

On Friday, the Sensex settled 307 points higher at 51,422, while the Nifty gained of 97 points to end at 15,435.

Steady decline in daily Covid-19 cases, rising hopes for another stimulus package to support the most affected sectors in the second Covid wave, corporate earnings and positive global cues boosted market sentiment for the markets.

The rally was also powered by heavy-weight Reliance Industries that rose by about 6% to close at Rs 2,094 on Friday.

Sectorally, rally was seen in energy, oil & gas, telecom, and metals stocks, while profit booking was visible in healthcare, power, utilities, and consumer durable stocks.

The mid and smallcap sectors also gained momentum but underperformed benchmarks, as the Nifty Midcap 100 index was up 1.1% and smallcap 100 index up 1.83%..

Experts believe one may see a continuation in the rally and say dips should be used as a buying opportunity.

Markets will react to corporate earnings, news on Covid cases, stimulus announcements if any, auto sales numbers and most importantly to the GDP growth numbers for the march quarter.

Here’s what experts say investors should do on Monday

Shrikant Chouhan, EVP, Equity Technical Research at Kotak Securities

The Nifty eventually touched a new high above 15,431 level but the Sensex is still behind by 1000 points at 51400 and the main reason behind it was the underperformance in HDFC and HDFC Bank. However, in the coming days we could see the rally in HDFC twins and in those stocks that have underperformed in the current upmove. The Nifty has managed to break the 15430 level after 16 weeks of consolidation.

This is the biggest and time consuming consolidation which will definitely give a good support to the market and we can see a further increase above 15000. The strategy should be to buy on dips. Bank-Nifty is also showing strength and we can see the level of 36500 in the coming weeks. Bank-Nifty’s main support is 34400 and 34000.

Nagaraj Shetti, Technical Research Analyst, HDFC Securities 

After opening on an upside gap of 84 points, Nifty shifted into a range bound action with positive bias, which continued for the whole session. Intraday minor dips in between were used to move up further and the market finally closed near the highs.

The short term trend of Nifty continues to be positive. Having, moved above the resistance at 15430, one may expect further upside in the coming sessions. The next upside targets to be watched around 15800 and this could be achieved in the next one week. Immediate support is now placed at 15350-15300 levels.

Manish Jain, Fund Manager, Ambit Asset Management

Equity markets, unlike investors, are always forward looking. One of the key reasons why the indices have not corrected despite the second wave is that financial and human impact needs to be differentiated between. Unlike the first wave, the state governments have been smart about the lockdown and in that respect logistics and production has not completely broken down. Hence, the overall economic impact on the economy and growth is going to be limited. Moreover, with a V shaped recovery still in the offing and prospects of a double digit growth still look bright for FY22, We do believe that rally in quality stocks has just started.

Naveen Kulkarni, Chief Investment Officer, Axis Securities

If the government is able to arrest Covid 2.0 spread completely in the next 15-30 days, then the unlock trade will play in the market and the current rally will sustain. Any delay in unlocking the economy beyond June will be a key risk in the near term. We could see some profit booking, as today’s market has crossed its previous high, but the long term structural story is intact for the Indian market. Broader market looks attractive at the current level and the sector rotation will play a crucial role to generate alpha in the near term.