The bias for the BSE benchmark index, technical charts suggest, is likely to remain bullish as long as the index holds above 75,600 levels for the rest of the year.
The S&P BSE Sensex topped the 80,000 mark for the first time in intraday trade on Wednesday, July 3, 2024, led by strong gains in banking stocks, especially HDFC Bank, which surged 4 per cent to Rs 1,794 apiece.
The BSE benchmark index took just seven months to surge from 70,000 to 80,000.
In the process, the BSE Sensex has gained 10.8 per cent so far this calendar year.
The index raced to 7 per cent in June on the back of optimistic economic growth prospects after the Lok Sabha elections results.
Analysts believe there is more room for an upside but investors need to be patient as it will not be a runaway rally for the markets from here on.
Domestic cues in the form of the Union Budget, the new government's 100-day agenda, the progress of monsoon, inflation levels, interest rate action of the Reserve Bank of India (RBI), and corporate earnings growth are factors the markets will keep close tab on.
Geopolitical developments, the outcome of elections in major countries, especially the US, central bank policy action, and oil prices are some of the factors that will have to be monitored.
The US Federal Bank's latest comment on US inflation is positive news for equity markets globally, said V K Vijayakumar, chief investment strategist at Geojit Financial Services.
"The Fed's next rate action is likely to be a rate cut, which is good news for the global equity markets, including India. The Reserve Bank of India also is likely to follow suit with a rate cut in the next policy meeting," said Vijayakumar.
The markets have broken out of a range and look strong from a short-term perspective, according to Gaurav Dua, senior vice-president, head of capital market strategy & investments at Sharekhan by BNP Paribas.
That said market valuations are not cheap at current levels and investors should stay with quality names in the largecap universe.
"There could be some pain in the broader markets, especially after 15-16 months of a strong up move. We have been advising our clients to cut exposure to the small and midcap stocks (SMID) and stick to the largecaps. SMID is trading at 32x P/E on a trailing basis, as compared to 23.5-24x for largecaps," said Dua.
The Sensex can potentially rally to 87,650 levels in the next six months, with interim resistance seen at 84,250.
The bias for the BSE benchmark index, technical charts suggest, is likely to remain bullish as long as the index holds above 75,600 levels for the rest of the year.
Near-term support for the Sensex is seen at 78,100 levels, according to technical charts.
"The momentum is strong and can take the Nifty50 index higher to 24,500 levels in the days ahead. It will take a breather there and spend some considerable time consolidating," said Ajit Mishra, senior vice-president for research at Religare Broking.
"Once a strong base is formed, the index can then spurt to 25,600 levels by CY24-end," Mishra added. "The corresponding levels for the Sensex are around 85,000 levels."
Feature Presentation: Aslam Hunani/Rediff.com
