Indian stock market's frontline index, the Nifty 50, is nearing the psychologically significant 25,000 mark. On July 29, the index reached an all-time high of 24,999.75, falling just short of surpassing this milestone. On Tuesday, the index hit its day's high of 24,971.05, and on Wednesday's trade so far, it has hit an intraday high of 24,954.45.
Market experts remain positive about the market's medium to long-term prospects. They believe that the Nifty 50 may continue its rally even as valuations are high, thanks to robust retail participation backed by the durability of India's economic growth.
Neeraj Chadawar, the head of fundamental and quantitative equity research at Axis Securities, believes that macroeconomic developments, ongoing Q1FY25 earnings, progress of the monsoon, the direction of bond yields, oil prices, and investment flows will drive the market's near-term fundamentals.
As the mid and small-cap segments look overheated, experts expect inflows to shift to large caps, which will boost benchmark indices.
"With a strong catch-up by midcaps and small caps in the last couple of months, the margin of safety (in terms of valuations) for these segments at current levels has reduced as compared to large caps. The broader market may see some time-wise correction in certain pockets in the near term, and flows will likely shift to large caps. Due to this, the Nifty 50 index could achieve a new high in the near future," said Chadawar.
Barring the risk of unknown black swan factors and volatility due to news flows regarding the US Presidential Election, which can trigger a deep correction in the market, experts do not see any major challenge for bulls. Even though they expect intermittent corrections of about 5-10 per cent, they say the Indian stock market remains structurally positive, and the Nifty 50 could continue its upward march.
Rohit Srivastava, founder and market strategist at Indiacharts.com, expects the Nifty 50 to head towards 25,800.
"We are in a bull market, so do not see a top yet. September-October is when the US election risks will kick in. So, we could head toward 25,800," said Srivastava.
According to Shrey Jain, the founder and CEO of SAS Online, the Nifty 50 may touch 25,100 soon, and if the index sustains above this level, it can touch 25,600. He sees strong support for the index at 24,500-24,450 zone.
He said instead of trying to predict the market top, one should ride the rally with appropriate stop losses.
"Aggressive short positions should be avoided unless there is a clear break in the upward trend. There may be a fair possibility of a time correction in the near term, wherein the index consolidates in a relatively narrow range—something similar to the Jan-June 2024 movement in Nifty," said Jain.
Divam Sharma, the founder and fund manager at Green Portfolio, believes there are more legs to this rally due to abundant liquidity in the market.
"Look at the liquidity in markets. The monthly SIP inflows in mutual funds of over twenty thousand crore rupees are keeping markets’ spirits up. Then, there are inflows from the insurance sector, pension funds, etc. And of course, we have been seeing very strong retail participation and DII inflows. All of this liquidity is one of the key drivers for the rallies we have been witnessing," said Sharma.
"What we’re seeing right now is a structured bull run from the markets. That said, it’s still difficult to define where the markets might reach. These are volatile times, and we might see some sharp corrections, but even those are expected to be followed by immediate buybacks. I continue to be bullish on the markets," said Sharma.
Mandar Bhojane, an equity research analyst at Choice Broking, believes the Nifty 50 could reach 25,500 and 25,700 in the coming days.
In his view, 24,400 and 24,200 act as immediate support levels, presenting opportunities for buying on dips.
Bhojane pointed out that the Relative Strength Index (RSI) currently stands at 72 and is trending upward, indicating increasing buying momentum. Furthermore, the Stochastic Relative Strength Index (Stoch RSI) has recently experienced a positive crossover, moving out of the oversold region. These technical indicators, when considered together, suggest that Nifty has the potential to reach a target price of ₹25,500 and ₹26,000 in the near term.
"The overall trend remains sideways to bullish, and the market is expected to remain highly volatile near all-time high levels. Investors should hold their positions with a trailing stop-loss. Any dip will be a buying opportunity as the overall trend remains bullish," said Bhojane.
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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.
