The rise in BSE Sensex is supported by continuous FII inflow, a rise in capital expenditure, robust economic growth despite global headwinds, a pause in rate hikes and a strong earnings outlook.
BSE Sensex finally hit a fresh all-time high today, after multiple attempts. Though the pace of the rally has slowed down over the last few weeks, analysts believe that the underlying momentum of the market is still strong. The market sentiment, according to analysts, has been supported by continuous FII inflow, a rise in capital expenditure, robust economic growth despite global headwinds, a pause in rate hikes and a strong earnings outlook. Both the 30-share BSE benchmark and NSE Nifty 50 have jumped 4% year-to-date. Meanwhile, the Nifty 50 is just 12 points away from its all-time high of 18,887.60.
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What helped Sensex reach a fresh all-time high?
“Sensex touched the all-time high mark, and Nifty 50 is a few points away from the all-time high level, which was earlier seen in Nov’22 end. The Indian market has seen a solid rally in the last couple of months, especially in the mid and small-cap space, led by positive FII flows, robust economic growth vs other EM countries, strong earnings outlook, robust demand across the sector, the banking sector in better shape, and private capex cycle expectations,” said Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS.
Return of FIIs since April boosted market sentiment
“BSE Sensex touched a new high today on the back of a sustained increase in capital expenditure by the GOI coupled with rising manufacturing PMI. Despite the increase in interest rates we are witnessing rising credit demand and India Inc today can boast of much better Balance Sheets than ever before. The return of FIIs to our markets since April has boosted sentiments even as domestic investors continue to repose confidence in Indian equities,” said S Ranganathan, Head of Research at LKP Securities.
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What’s next for BSE Sensex, NSE Nifty 50?
Traders may book profits but investors should use dips to buy more
“We believe that traders can lighten up their long-leveraged positions and book some profits in the immediate term. But medium to long-term investors must continue to hold on to their positions and use dips to buy more,” said Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities.
Nifty year-end target: 20200
“The Indian economy stands at a sweet spot of growth and remains the land of stability against the backdrop of a volatile global economy. We continue to believe in the long-term growth story of the Indian equity market, supported by the emerging favourable structure, as increasing Capex enables banks to improve credit growth. Our base case Dec’23 Nifty target is at 20,200 by valuing it at 20x on Dec’24 earnings,” said Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS.
Sensex immediate demand zone projected to be in 61700-62400 range
“While the headline indices Nifty and Sensex are displaying gradual upward movement, the true growth potential lies within the broader market. This broader market outperformance is expected to persist as we approach the peak interest rate scenarios. Although some profit booking is anticipated around the 64,000 level, any temporary decline presents an excellent buying opportunity. The immediate demand zone is projected to be within the range of 61700–62400,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.
