Experts see market rally nearing its top
1 min read . Updated: 04 Aug 2022, 06:06 AM IST
PremiumWhile the benchmark Nifty index has rallied a whopping 14.5% in just under five weeks from its June low, and the volatility index, India Vix, is not showing any signs of underlying fear on D-Street, most fund managers and market experts said investors should be cautious as a potential peak could be just around the corner
MUMBAI : While the benchmark Nifty index has rallied a whopping 14.5% in just under five weeks from its June low, and the volatility index, India Vix, is not showing any signs of underlying fear on D-Street, most fund managers and market experts said investors should be cautious as a potential peak could be just around the corner.
Nilesh Shah, chief executive and managing director, Kotak Mahindra AMC, said while he expected the June low of 15183 to provide major support, the market could be “nearing" a top, after which it could move sideways. Investors must stick to the allocation “dharma" and be “equal-weight," using dips to buy in a phased manner for the long term, he added.
His word of caution assumes significance, considering the Nifty has run up 2200 points from its June low through to 17388 in a span of 33 sessions, and the fear gauge remains at 18.43, or close to its multi-year equilibrium of 20.
Vix levels below 15 reflects exuberance and above 25 hints at extreme fear.
The market now trades 7% below its record high of 18,604 on 19 October 2021.
According to Naveen Kulkarni, chief investment officer, Axis Securities, the “worst of FII selling is behind us," but the macroeconomic developments will continue to limit the market upside.
He expects 17000-17800 to be the near-term market range, implying a 2-2.5% upside from Wednesday’s closing at 17388. Kulkarni expects the Nifty to touch 18400 by the end of FY23.
Kulkarni said the European conflict, oil prices, and direction of inflation and growth in advanced economies will be potential risks for the market.
Data from Axis Securities showed thatt owing to the factors, FIIs sold shares worth $33.1 billion since October last year. DIIs, on the other hand, were net buyers of $40.7 billion, limiting the downside.
