Finace And Stock

Dip buyers will keep record highs intact for stocks next week

MUMBAI: The domestic equity market is likely to continue its positive momentum next week and hit new record highs, as any weakness is likely to be seen as buying opportunity by investors, said analysts.

“The return of FIIs after a five-month hiatus and the support garnered at every dip also point to the continuation of this optimism in Indian equities. As a result, every dip still offers a good opportunity to invest,” said brokerage firm Samco Securities.

This week Nifty50 and BSE Sensex rose over 1.5 per cent each despite a selloff on Monday as investors saw past the near-term concerns over a default by China’s real estate giant Evergrande and the US Federal Reserve’s indication of starting the tapering of its asset purchase program.

The BSE Sensex on Friday closed above the 60,000 mark for the first time ever while Nifty50 neared the 18,000 mark amid optimism over economic recovery and corporate earnings growth. Analysts firmly believe corporate earnings will continue to gather pace as the economy recovers.

“Crossing the 60K mark is another milestone for the market. We could see many more positive surprises from the market in the next one-two years, as we are entering a positive upcycle of the earnings trajectory,” said Naveen Kulkarni, Chief Investment Officer at Axis Securities.

The return of buying from foreign portfolio investors in September along with continued inflows from retail investors have helped the market emerge the best performing market in the world with year-to-date returns of more than 28 per cent.

“We are still at the mid-stage. We are definitely not at the end stage of the bull market,” Shankar Sharma, Vice-Chairman and Joint Managing Director of First Global told ETNow on Friday.

While the benchmark equity indices have seen a rapid move this week, broader market indices continued to underperform, indicating that investors are moving towards largecaps names. Nifty Midcap 100 and Nifty Smallcap100 indice rose 0.8 per cent and 0.4 per cent, respectively, as they bore the brunt of Monday’s selloff.

Even though Sensex hitting the 60,000 mark dominated headlines for the week, it was the real estate sector that emerged as the true star. Nifty Realty index soared more than 21 per cent with individual counters like Godrej Properties and DLF rising more than 30 per cent each during the week.

While the maniacal buying in realty stocks was sparked by the strong sales numbers announced by Godrej Properties for one of its residential projects in Delhi-NCR, it underscored the emerging signs of a long-term upcycle for the sector.

Jefferies’ Global Head of Equities Christopher Wood said a structural bull market was unfolding in the Indian real estate sector. Analysts said the sector’s hot streak should continue as the realty index is still more than 55 per cent away from its record high hit during 2007-08.

Going by technical charts, analysts said Nifty50 will find near-term support at 17,800, but the 18,000 mark would be a hurdle, as a major resistance lies there.

“We expect the market to gain momentum, leading to an upside projection till the 18,000 level. We have observed that momentum indicators like RSI and MACD have remained positive and expect the market breadth to improve, further strengthening a short-term bullish outlook,” said Ashis Biswas, Head of Technical Research at CapitalVia Global Research.

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