June expiry data shows Nifty rollovers increased to 76.1% as against 70.6% in the previous expiry. In index futures, FIIs increased their net long position by 37,000 contracts in June series from 19,000 and the Long-Short ratio increased from 0.97 to 1.53.
On Friday, Sensex closed 803 points or 1.26% higher to close at a record high of 64,718.56. Meanwhile, Nifty50 closed at 19,189.05, up 1.14% or 217 points.
“India stands out in a slowing world and a weakened China. Manufacturers as well as investors are looking for alternatives to China and presently, India is the best bet in all of Asia. A lot of money is on the side-lines and the carry trade is playing out from Japan. FPI money should keep flowing into India, with expected stable yields and healthy INR outlook,” said Amar Ambani of YES Securities.
With mid and smallcaps outperforming by a wide margin, the participation in this rally has been broad-based with analysts saying that with valuations being reasonable Nifty can rally even up to 21,000.
Indian equities are experiencing PE re-rating and have been supported by strength in global markets as well. At current levels, the index trades at 17.7x basis of its FY25E EPS of Rs 1,060.
“The index earnings are likely to grow by ~16% on a CAGR basis over the FY23-25 period. We envisage a continuation of the re-rating and expect the Nifty index to likely trade towards +1 Stdev. ~20+ P/E levels which translates into ~21000 print on index,” said Anu Jain & Ashish Mittal of 360 ONE Wealth.After a late start, the encouraging progress of monsoons across India is also boosting sentiments. If El Nino fears subside, investors see more sustainable up move in the market.
“With monsoon kicking in and RBI taking a rate pause, the strong momentum in earnings is likely to continue. Thus at current valuations, the market is expected to continue its up move and remain buoyant,” said Siddhartha Khemka of Motilal Oswal.
Chartists say that Nifty may move towards 19,500-19,900-20,100 levels in the medium-term.
On the weekly chart, Nifty has successfully invalidated a dark cloud cover pattern. “It’s worth noting that failed patterns often result in more significant price movements than the initial pattern itself. In the short term, the overall trend is expected to remain positive as long as it stays above the support level of 18,700,” said Rupak De, Senior Technical Analyst at LKP Securities.
This level is significant because put writers, who provide downside protection, are actively positioned there to prevent a substantial decline in the index.
The immediate resistance for the Nifty index is identified at 19,000. If the Nifty convincingly breaks above this level, it may induce an upward movement towards the 19,450, he said.
The only conundrum at this point in time is the global geopolitical situation and the further tightening of interest rates by major global central banks.
Other than that, any negative surprises in the Q1 earnings season next month may also spoil the party. “Sectors to watch out for now are IT and banks. The IT sector is under-owned and yet to participate in the rally. Banks on the other hand, have the highest weightage in the index and will probably do the heavy lifting from here,” said Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
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