Nifty hits record high for 25th time in 2024! Will the bull run continue?

Bull runs galore! Indian equity benchmarks continued their bullish streak for the fifth consecutive day, reaching new milestones on June 28. This is the 25th time the benchmark Nifty has hit a record high this calendar year. So far in 2024, the benchmark has already given over 10 percent returns.

In 2023 alone, the Nifty set record highs on 27 occasions, a notable achievement. Almost closing in on this milestone, in just the first half of 2024, it is already near the number of new peaks reached throughout the entire previous year. Since the year 2000, the Nifty has recorded its highest number of record highs in three specific years: 2006, 2014, and 2021, totaling 54 highs during these periods. However, it experienced no new peaks during six other years: 2001, 2002, 2009, 2011, 2012, and 2016.

The Nifty soared to an all-time high of 24,124 and the Sensex hit its record peak of 79,546. Nifty crossed the psychological mark of 24,000 for the first time in the previous session June 27. Remarkably, it took only 23 sessions to rise from 23,000 to 24,000, compared to the 88 sessions it previously took to move from 22,000 to 23,000 in May 2024

Sensex also hit the 79,000 mark for the first time in the previous session, signaling a healthy and sustained confidence in the Indian market, underpinned by strong fundamentals in key sectors as well as strong buying in blue-chip companies.

"Certainly bulls couldn’t have asked for anything better than this after what we saw on the day when election results were announced The index recovered all of its Election Day losses in just three trading sessions. This must have been one of the fastest recoveries in the history of Indian capital markets which can mainly be attributed to fund flows," said Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities.

Sheth further pointed out that looking at FPI’s fund flow data from Sebi, you will see that they have been buyers in the last 12 sessions from 10th to 26th June. They have pumped in nearly ₹32,087 crore in Indian equity markets. DIIs have pumped in ₹20,002 crore in the same period. Retail investors on the election day alone bought stocks worth ₹21,179 crore. Thus market participants have been buying equities left, right and center over the last fortnight which has mainly driven the markets higher.

Despite concerns about the market being overbought, analysts remain optimistic about sustaining this rally in the near term. They cite strong gains in large-cap stocks as a key support factor driving market momentum.

"This accelerated growth, despite concerns over valuation, suggests a bullish outlook for the Indian market. The current momentum indicates that the Sensex might soon touch another level, before the Union Budget. Large-cap stocks, particularly in the banking and telecom sectors, are driving this upward trend with their solid fundamentals, reflecting positive market sentiment and investor confidence. Going forward, these sectors are likely to continue supporting the market's growth trajectory," said Trivesh, COO Tradejini.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, also expressed confidence that the current bull run in Indian markets is likely to be sustained in the near term, driven primarily by large-cap stocks. He highlighted expectations of increased foreign inflows into India, citing strong macroeconomic fundamentals compared to other emerging markets.

Addressing concerns about market overvaluation, Vijayakumar dismissed the notion of a bubble forming, noting that Nifty's Price-to-Earnings (P/E) ratio of 21x FY25E earnings remains below the perceived bubble threshold of 23x P/E ratio. He emphasised that this valuation level supports continued market optimism without significant overheating risks.

Outlook Ahead: Analysts see Nifty around 24,500 in July

Going ahead, Sheth noted that from a seasonality perspective, July has been one of the most bullish months for Indian equity markets. Nifty has closed on a positive note in 9 out of the last 10 years with an average gain of 3.3 percent. With bulls sitting firmly in the driving seat and multiple factors like liquidity, seasonality, and momentum in bulls’ favor, one can expect the rally to continue in July with a target of 24,500 on the index.

Ajit Mishra – SVP, Research, Religare Broking, also expects the ongoing bull trend to continue. Following the banking sector, he anticipates that IT and FMCG will play crucial roles in maintaining the positive momentum. “With the Nifty crossing the 24,000 mark, we see potential for it to test 24,500, with support around the 23,600 level. Participants should align their positions accordingly and look for buying opportunities on dips,” advised Mishra.

Rahul Sharma, Head of Technical and Derivatives Research, JM Financial Services, also expects momentum to continue with resistance levels placed at 24,200 and 24,450.

From an investment perspective, VK Vijayakumar of Geojit Financial Services, advised sticking to large-cap stocks amidst the ongoing record-breaking rally. He cautioned against investing heavily in small-cap stocks during this period.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.